“Signed contracts to buy existing homes fell 4.3 percent in December from the previous month, according to a monthly index from the National Association of Realtors. That missed analysts’ expectations of a one percent gain. The index is 6.9 percent higher than December of 2011. Realtors say it is not lack of demand but supply at the end of 2012 that pushed the numbers down.
“Buyer interest remains solid, as evidenced by a separate Realtor survey which shows that buyer foot traffic is easily outpacing seller traffic,” wrote Lawrence Yun, chief economist for the NAR in a release.
(Read More: New Housing Fears: Home Prices Rising Too Fast?)
Much of last year’s gains in existing home sales was driven by investor demand for foreclosures and other distressed properties. Millions of dollars, largely in cash, from private equity, flowed into the market, pushing supplies down dramatically and even causing bidding wars in some of the previously hardest hit markets. That pushed prices up in the double-digit range, but critics caution that this is not a real organic recovery in the overall market. These existing sales numbers as well as a disappointing read last week on sales of newly built homes are bolstering that warning.
The Realtors’ monthly index fell 5.4 percent in the Northeast month-to-month, rose 0.9 percent in the Midwest, fell 4.5 percent in the South and fell 8.2 percent in the West. The West, and its severely distressed markets like Phoenix and Las Vegas, has been the center of most investor interest and is therefore seeing the lowest supply of properties for sale. The West is also the only region that saw a year-over-year decline in signed sales contracts in December….”
