Economists and housing analysts got a jolt Monday when a key report on the real estate market came in much stronger than expected. The National Association of Realtors announced that December existing home sales jumped 7 percent from the previous month, although they remain 4 percent below their year-earlier levels. But don’t uncork the champagne just yet; a closer look at the figures suggests the report isn’t as optimistic as it first appears.
Here are four things you should know about the December existing sales report.
1. Bargain hunting: The increase in sales was driven mostly by sharply lower home prices, as property owners offered discounts and banks slashed prices on foreclosed properties. The median existing home price plunged more than 15 percent, to $175,400, from December 2007. Meanwhile, distressed sales made up 45 percent of transactions, NAR said. “Nationwide home prices dropped by the most on record in December, slumping to the lowest level in almost six years,” Mike Larson, of Weiss Research said in a report. “That caused some bargain hunters to step off the sidelines.”
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