Existing home sales yo-yoed again in December.  The National Association of Realtors® (NAR) said total sales of existing homes, including single family residences, condominiums, and co-ops were estimated at a seasonally adjusted annual rate of 5.04 million, a 2.4 percent increase from November rate of 4.92 million. November's sales had fallen off a 5.25 million pace in October, the best month for sales in over a year.  NAR said December's sales represented the sixth time in seven months that sales have exceeded 5 million units and NAR noted that the increase came despite a tightening of inventory in December.  

December sales were up 3.5 percent from the pace in December 2013.  This was the third straight month that existing home sales were higher than year earlier levels.

Single-family home sales increased 3.5 percent to a seasonally adjusted annual rate of 4.47 million in December from 4.32 million in November and were 4.0 percent above the 4.30 million pace a year ago. Existing condominium and co-op sales had a sales rate of 570,000 units in December, unchanged from a year earlier but down 5.0 percent from the 600,000 pace reported for November.

Lawrence Yun, NAR chief economist, says sales picked up in December to close a 2014 that got off to a sluggish start but showed encouraging signs of activity the second half of the year. "Home sales improved over the summer once inventory increased, prices moderated and economic growth accelerated," he said. "Sales were measurably better in the second half - up 8 percent compared to the first six months of the year."

The median existing-home price for all housing types in December was $209,500, which is 6.0 percent above the December 2013 median and marks the 34^th consecutive month of year-over-year price gains.  Single-family homes had a median price of $210,200, an increase of 6.3 percent from a year earlier while existing condo units sold for a median price of $204,000, a 3.2 percent increase.

NAR reported that for all of 2014, there were 4.93 million existing home sales, a 3.1 percent decline from total 2013 sales of 5.09 million. The national median existing-home price for the year was $208,500, the highest since 2007's median of $219,000 and a 5.8 percent increase from $197,100 in 2013.

Total inventory at the end of December dropped 11.1 percent to 1.85 million existing homes available for sale, a 4.4-month supply at the current sales pace.  The inventory was estimated at 5.1 months in November. Unsold inventory is now 0.5 percent lower than a year ago (1.86 million).

"A drop in housing supply in December raises some affordability concerns in the months ahead as minimal selection and the potential for faster price appreciation could offset the demand from buyers encouraged by a stronger economy and sub-4 percent interest rates," Yun said. "Housing costs - both rents and home prices - continue to outpace wages and are burdensome for potential buyers trying to save for a downpayment while looking for available homes in their price range."

The mix of buyers shifted slightly in December with the share of first-time buyers falling from 31 percent in November to 29 percent while the investor share increased by 2 percentage points to 17 percent.  First-time buyers also represented 29 percent of buyers for the entire year.  Sixty-three percent of individual investors paid cash for their home purchases and all cash sales presented 26 percent of all existing home sale transactions, up from 25 percent in November.    

NAR says that the annual share of first-time buyers is at the lowest level in nearly three decades, but NAR President Christ Polychron has hopes that the half-point reduction in annual FHA mortgage premiums will help increase those numbers when it goes into effect next week.   "NAR is a strong supporter of the FHA and its vital role in the mortgage marketplace for homebuyers," he said. "Realtors support responsible lending to qualified borrowers and the move to lower premiums will enable more buyers to enter the market while continuing to protect taxpayers from the risky lending practices that led to the housing crash."

Distressed sales - foreclosures and short sales - were up slightly in December to 11 percent from 9 percent in November but are down from 14 percent a year ago. Eight percent of December sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 15 percent below market value in December compared to 17 percent in November.  Short sales were discounted 12 percent, one point below the November number.       

Properties typically stayed on the market for 66 days in December, one day more than the previous month but down from 72 days a year earlier.  Short sales were on the market the longest at a median of 98 days while foreclosures sold in 61 days and non-distressed homes took 66 days. Thirty-one percent of homes sold in December were on the market for less than a month.

December existing-home sales in the Northeast declined 2.9 percent to an annual rate of 660,000, but are 3.1 percent above a year ago. The median price in the Northeast was $246,600, an annual increase of 3.2 percent.

In the Midwest, existing-home sales fell 3.5 percent to an annual level of 1.09 million in December, and are now 2.7 percent below December 2013. The median price increased by 5.3 percent to $159,100.

Existing-home sales in the South climbed 3.8 percent to an annual rate of 2.17 million in December, and are 7.4 percent above December 2013. The median price in the South was $184,100, up 6.6 percent from a year ago.

Existing-home sales in the West jumped 9.8 percent to an annual rate of 1.12 million in December, and are 2.8 percent above a year ago. The median price in the West was $299,600, which is 5.6 percent above December 2013.