Sales of existing homes plunged 16.7 percent in December from a seasonally adjusted annual rate of 6.54 million units in November to 5.45 million last month, the lowest rate of sales since August.
It is no coincidence that the sharp decline came just after what was believed to be, at the time, the expiration of the government's $8,000 homebuyer tax credit late-November, a stimulus program that has since been extended until this spring.
As incentive programs such as this one are more likely to "pull demand forward" rather than create new demand for housing, the property market will be watched closely in the coming months to see how big an impact this will have.
Since there is a huge difference in typical sales volume throughout the year - summer sales often two or three times the volume seen in January and February- seasonal adjustments will also play a crucial role in analyzing the data in the months ahead.
It is found that unsold homes rose from a four-year low of 6.5 months of supply in November to 7.2 months in December, but this statistic too is greatly affected seasonal factors. Given that optimism for the property markets in parts of the country has been rising and more potential sellers will think now is a good time to list their homes for sale, this combination of factors - fewer buyers and more sellers - could see the inventory numbers move much higher over the winter.
It's going to be another interesting year for real estate.
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