National, local home sales see one-month increase

U.S. home sales rose a surprising 6.5 percent from November to December — the largest percentage jump in nearly seven years — fueled by lower mortgage rates and the lure of lower prices.

With supply far outpacing demand and foreclosures flooding many markets in the past year, the median home price nationally has fallen 15 percent, to $175,400, according to a report released Monday by the National Association of Realtors.

Even with December’s surge, sales were still below levels of a year earlier.

Metro Atlanta has paralleled national numbers, said Steve Palm, president of SmartNumbers, a Marietta research firm: about 4,400 homes were sold in December, up from November but down roughly 14 percent from the year before.

The median price of a home sold last year in metro Atlanta was $164,250 — down 10 percent from 2007, he said.

While discounts are needed to sell off a surplus, the data doesn’t yet point to a turnaround: The pool of homes for sale is still far too large to be absorbed by the number of buyers. Meanwhile, a faltering economy has taken paychecks away from millions of potential buyers and shaken the security of many millions more.

But after real estate’s spectacular three-year decline, even a one-month surge was welcome news for sellers, as well as for professionals.

“I’m encouraged by what I’m seeing,” said Ron Coshatt, a Realtor with ReMax Metro Atlanta. “It’s not across the board, but I have seen a pickup in homes sold, especially in the lower price ranges.”

In that sub-$100,000 range, foreclosures account for a lot of the action, he said.

To beguile buyers, other sellers have surrendered some of their asking price. Mortgage rates, meanwhile, have added enticement in recent months by flirting with 5 percent or lower.

“There was a sense of urgency at the beginning of December,” said Natalie Gregory of Keller Williams Realty. “Normally people hunker down before the holidays but it was different this time, and I think it was because of the interest rates.”

Economists say that until inventories of unsold homes slip back to historically typical levels — closer to five or six months — prices will likely keep falling and builders will be hamstrung.

Nationally, those inventories dropped from 11.2 months in November to 9.3 months in December.

The NAR numbers, which are seasonally adjusted, showed existing home sales in December running at a rate of 4.7 million per year, compared to a 4.45 million rate in November. That was still down from 7.1 million homes sold in 2005.

But with homebuilding plunging, sales are chipping away at the huge overhang of unsold houses.

Buyer interest may not be overwhelming, but it is trending upward region-wide, said Eugene James, director of the Atlanta region for MetroStudy, a national real estate research firm.

The pool of properties for sale, while large, has shrunk, and a turning point could be approaching, he said. “I am seeing people getting extraordinarily low rates in addition to talking advantage of foreclosures out there.”

More than ever before, that flow of foreclosures has shaped the whole market, said Mark Vitner, senior economist for the Wachovia Economics Group.

Nationally, a stunning 45 percent of December sales were properties that had been through foreclosure. Many foreclosures are concentrated in the same regions that enjoyed yearly double-digit increases in prices during the housing bubble, like San Francisco, Phoenix, Las Vegas and southern Florida.

In contrast, Atlanta prices steadily gained ground, but did not soar — thanks to more than a decade of feverish homebuilding.

Now the area’s supply of homes vastly outnumbers potential buyers. Many homes sit empty, many lots await construction. And many of the people who bought those homes have stumbled into foreclosure, Vitner said.

“We stretched the limits of homeownership, and there was a lot of subprime lending,” he said. “Atlanta is the hardest hit single-family home market that didn’t have the benefit of the boom in prices.”

To recover, Atlanta must rebalance supply and demand. So long as builders barely build and the region’s population keeps growing, that rebalancing will come — but probably not until late in 2010 or even 2011, Vitner predicted.

Housing, for so long a story of ever-rising value, has turned out to be subject to the law of gravity. One month does not mean a return to that trajectory, but even the pessimists are only quibbling about how long it will take to rise again.

“We are more than halfway through this,” Vitner said.