C21AGVoices

Don’t let the plunging median sales price fool you — December’s Existing Home Sales data has home sellers smiling.

Just one month after falling below the 5-million unit trend line, sales volume roared back by 300,000 homes in December, surprising housing analysts and making a case that this spring’s Buying Season could be a competitive one.

Falling home prices helped fuel home sales.  Nationally, the median sales price — the point at which half of all homes sold for more and half sold for less — was $175,400, down $32,000 from last year.

However, the most important part of December’s Existing Home Sales report isn’t making headlines.

At December’s sales pace, it would now take 9.3 months to exhaust the existing home supply.  Last month it was 11.2 months.  This means that buyers are competing to purchase fewer homes which, in turn, puts upward pressure on home prices.

This is Supply and Demand at its most basic definition.

Since 2009 started, real estate agents and brokers at CENTURY 21 Advantage Gold and other offices in the Philadelphia marketplace have been noting an increase in buyer activity, which seems to indicate that people have begun to find some of their confidence in what has been a pretty stable market.Perhaps this additional activity is indicative of the absorption of the existing housing market.

Economists have long said that the keystone of housing’s recovery will be rebalancing in home supply.  Coupled with the all-time low in housing starts, December’s Existing Home Sales data signals future strength.

(Image courtesy: The New York Times)