WASHINGTON - Sales of previously owned U.S. homes fell at the fastest pace on record last month as the boost from a popular tax credit faded, industry data showed on Monday.
The National Association of Realtors said existing home sales fell 16.7 percent to an annual rate of 5.45 million units in December. Analysts had expected a 5.90 million unit pace.
The drop in home sales is the payback for the acceleration of sales that occurred with the original first-time home buyers tax credit. ... There is an issue as to whether the decline represents a fundamental weakening, said Pierre Ellis, senior economist at Decision Economics in New York.
U.S. stock indexes briefly dipped on the data but later recovered. U.S. Treasury debt prices were little changed, while the dollar fell slightly against the euro.
Housing is recovering from a three-year slump, driven by a tax credit for first-time buyers and low mortgage rates. But recent data have raised concerns the recovery might be faltering.
For the entire year, sales rose 4.9 percent in 2009 to 5.156 million units, while prices fell from 2008 by 12.4 percent, probably the largest annual drop since the Great Depression NAR chief economist Lawrence Yun said.
The median home price rose 1.5 percent from December 2008 to $178,300. That was the first rise since August 2007 and the largest price rise since May 2006.
Sales fell in all four regions of the country. Sales in the Northeast fell 19.5 percent to a seasonally adjusted 910,000 unit pace. Sales in the Midwest fell 25.8 percent to 1.15 million units.
Sales in the South, the country's largest region, fell 16.3 percent to 2.01 million units and sales in the West fell 4.8 percent to 1.38 million units.
There were 3.29 million units for sale in December, which represents a 7.2 months supply at the December sales pace, up sharply from the 6.5 months supply in November.
For a graphic comparing existing home sales and the U.S. mortgage market, see: here