Existing-Home Sales Fall in December, but Up for the Year

Sales of existing U.S. homes plunged in December more than anticipated, the month after a government tax credit was originally due to expire.

Purchases decreased 17 percent, the biggest decline since records began in 1968, to a 5.45 million annual rate from 6.54 million pace the prior month, the National Association of Realtors said today in Washington. The median sales price increased for the first time in two years, reflecting fewer first-time buyers, the group said.

First-time buyers rushed to complete deals before the $8,000 government incentive was expected to end on Nov. 30. The subsequent extension and expansion of the credit, together with the one- to two-month delay between contract signings and closings, signals demand will pick up again in the first half of this year.

The share of homes sold to first-time buyers fell to 43 percent in December from 51 percent the prior month, Yun said, indicating the expected end of the tax credit played a role in the drop in sales.

To contact the reporter on this story: Courtney Schlissermanin Washington at cschlisserma@bloomberg.net