Home sale prices dropped by more than 12% last year, the sharpest fall since the Great Depression according to the National Association of Realtors. December sales took the largest drop in more than 40 years. Sales of previously occupied houses fell 16.7% and had been expected to fall by only about 10%.
First time homebuyers led the charge in last years home sales. The bad news for 2010 is that the extended homebuyer tax credit will run out at the end of April. This will, no doubt, slow the sales from first time homebuyers.
More bad news for the housing market, on March 31, the Federal Reserve is set to end its program to buy mortgage securities. This program was aimed to keep home loan rates low. Once that program ends, mortgage rates could rise.
Only 374,000 homes were sold last year, down 23 percent from a year earlier and the weakest year on records dating back to 1963, according to MSNBC.
Some good news is that the median sales price for December was $178,300, up 1.5 percent from a year earlier and the first yearly gain since August 2007.
Sales are now up 21 percent from the bottom a year ago, but they're down 25 percent from the peak more than four years ago.
Four markets -- Charlotte, Las Vegas, Seattle and Tampa -- hit their lowest index levels in four years, according to Wolf Blitzer of CNN Money. Any gains they recorded in recent months have been erased.
The housing market is still crawling along. News on the horizon is not good- incentives are going away and rates are expected to rise.
It will probably be several years before we see the housing market shift its weak trend. It will probably be about 5 years before strength returns to the market. The main indicator to watch for is the return of jobs. Spending can't come back until jobs do.
What do you think?