WASHINGTON -- Home sales rose in December to the highest pace in nearly a year. The gain coincides with other signs that show the troubled housing market improved at the end of last year
Still, sales remain depressed and ended 2011 well below healthy levels.
The National Association of Realtors said Friday that sales increased 5 percent last month to a seasonally adjusted annual rate of 4.61 million, the best level since January 2011 and the third straight monthly increase.
For the year, sales totaled only 4.26 million. While that's up from 4.19 million the previous year, it's below the 6 million that economists equate with healthy housing markets.
Sales are increasing at a time when the market is flashing other positive signs. Mortgage rates are at record-low levels. Homebuilders have grown slightly less pessimistic because more people are saying they might be open to buying a home this year. And home construction picked up in the final quarter of last year.
The median sales price rose 2.3 percent to $164,500 in December.
Hiring has also improved, which is critical to a housing rebound. Applications for unemployment benefits are near a four-year low. The unemployment rate fell in December to its lowest level in nearly three years. And companies are coming off their best six-month stretch for hiring since 2006.
Still the housing market has a long way to go before it is fully recovered from the housing bust four years ago. In the last four years, home sales have slumped under the weight of foreclosures, tighter credit and falling price.
Fewer first-time buyers, who are critical to a housing recovery, are in the market for a home. Purchases by that group fell last month to make up only 31 percent of sales. That's down from 35 percent in November. In healthy markets, first-time buyers make up at least 40 percent.
At the same time, homes at risk of foreclosure made up a third of all sales last month. In healthy markets, they comprise 10 percent of sales. Investors are increasingly buying homes priced under $100,000.
Still, sales rose across the country in December. They increased on a seasonal basis by more than 10 percent in the Northeast, 8.3 percent in the Midwest, 2.9 percent in the South and 2.6 percent in the West.
The glut of unsold homes declined to 2.38 million homes. At last month's sales pace, it would take nearly 7 months to clear those homes. Analysts say a healthy supply can be cleared in about six months.
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Here are the 11 real estate stories that we judged as the most important of 2011.
Time magazine was onto something when it named "The Protester" as its "Person of the Year." While its editors might have mainly had the Arab Spring and the Occupy Wall Street movements in mind, an offshoot of the economic unrest in the U.S. has been increasing protest and resistance among those already pushed out of their dwellings as a result of the recession, or who find themselves drowning in the debt of their underwater homes.
Two of the markets hardest hit by the housing collapse, Las Vegas and Florida, stirred back to life. The not-so-great news: Much of the run on homes came from bottom-feeding investors --- many of them foreign -- looking for bargain dwellings that they could turn around and rent. Still, that's better than bulldozing them.
At year's start, the government backed mortgage giants Fannie Mae and Freddie Mac already had set a record for the largest bailout of the financial crisis, at $150 billion and counting. This month their two former CEOs (pictured) became the highest profile individuals to be charged in connection with the economic meltdown. They and four others are accused of defrauding investors by understating the amount of high risk mortgages held by the lending companies. And just last week California's attorney general sued the Congressionally-mandated lending companies in connection with 12,000 foreclosed properties there. It was also the year when politicians from both sides of the aisle were calling for an end to Fannie Mae and Freddie Mac. A question for 2012, and maybe beyond: With about half of the entire U.S. mortgage market split between them, what's the alternative?
Looking for a glimmer of good news in the housing market? The U.S. Census bureau reported this year that there was a 4 percent rise in the number of households that are renting. Maybe that's why the recent, modest uptick in homebuilding comes in good part from multifamily construction. So while that's good news for builders and some investors, it's maybe not so good news for the average household -- since it's believed that foreclosures and short sales are responsible for putting more people in rentals, while probably making others gun-shy about buying, even if they could qualify for a loan.
While this year saw a decline in the number of Americans living in their own homes, with many of them being forced out by short sales and foreclosures, still more might have been feeling stuck with what they had. The Census Bureau reported thatU.S. mobility hasn't been this low since the late 1940s, when it first started following that trend. Along with a reality check on the dream of the owning one's own home, it challenges Americans' view of themselves as exploring new frontiers. In 1951, the percentage of Americans who moved reach its high of 21.2. In the most recent count, that's dropped to 11.5 percent.
At the end of one of its worst years ever -- and following one that was even worse -- the homebuilding industry saw reason to feel encouraged as the number of new homes and construction permits increased in October. While demand is still low and far under the amount that economists say is needed for a healthy market, homebuilders were expressing optimism. The housing-start statistics got their biggest boost from multifamily construction. Another sign that we're increasingly becoming a nation of renters.
Just when we thought interest rates on 30-year mortgages couldn't get any lower the fixed-rate dropped below 4 percent for the first time in a half a century. (That's when economists starting tracking this number.) What's more, the Fed announced this year that it planned to keep interest rates at record lows for the foreseeable future. Though that cheap money was intended to spur investment in housing, it didn't do much, with some speculating that it might even be keeping buyers on the sidelines with the expectation that there's no rush to purchase.
Pick your program: HAMP, HARP, EHLP or 2MP, the Obama administration's efforts to rescue underwater homeowners all seemed to do too little and for many arrived too late. Some blamed government ineptitude while others put it on the reluctance or outright resistance of banks to participate. And it's not like Republicans offered much in the way of alternatives. As Americans headed into an important election year, the continuing housing crisis seemed to receive scant attention from either major party.
Home prices and values sunk deeper in 2011 with a year-over-year price drop in the third quarter of 3.9 percent, according to the Case-Shiller Index, and were expected to be down 1.57 percent in the last quarter. They were down by for the year by 0.4 percent, as of September. Meanwhile, home values were expected to drop by 3 percent, or about $700 billion (though that's about a third less than they did last year). And if you think prices are already in the cellar, brace yourself for another drop in 2012, say a panel of experts surveyed by Zillow, who add that then or in early 2013 prices should really, truly hit bottom (they think). On average, home values have fallen about 24 percent in the past five years.