Sales of existing homes plunged 17% — more than anticipated and the biggest month-to-month decline on record — in December, the month after a government tax credit was originally due to expire.
Purchases fell to a 5.45 million annual rate, the National Association of Realtors said Monday.
The median sales price increased for the first time in two years, reflecting fewer first-time buyers, the group said.
Such 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 that demand will pick up again in the first half of this year.
"We'll see a pickup in existing home sales in the next couple of months" as people take advantage of the tax-credit extension, said Adam York, an economist at Wells Fargo Securities LLC in Charlotte, who forecast a 5.4 million sales pace. Though "we're past the bottom," he said, "I don't think there's going to be a lot of buyers out there looking for a home outside of the tax-induced effects until they feel more comfortable with the labor market."
Economists had forecast that sales of existing homes would fall to a 5.9 million rate in December, according to the median of 61 projections in a Bloomberg News survey.
Estimates ranged from 5.4 million to 6.75 million.
The number of previously owned unsold homes on the market decreased 6.6%, to 3.29 million, the lowest level since March 2006. At the current sales pace it would take 7.2 months to sell those houses, compared with 6.5 months at the end of November.
The median price was $178,300 in December, up 1.5% from a year earlier.
The increase was the first since August 2007 and the biggest since May 2006, the agents' group said.