So is December's rise in existing home sales the early sign of a market rebound or a statistical anomaly on the way to further declines? A story in Reuters ponders the question:
Until now, plunging home prices have been keeping many potential home buyers at bay because they were leery of buying an asset that was all but guaranteed to lose value, at least initially.
Now, though, prices appear to have fallen enough in some regions to make buying cheaper than renting, particularly in the West. Add with record low mortgage rates, demand has started to rebound...
Home prices have dropped so much in some areas of California that monthly mortgage payments on single-family detached homes are comparable to apartment rents.
And while distressed properties account for an abundance of sales around the country, the trend is nevertheless helping assuage one of the market's biggest banes: a huge supply of unsold homes.
Existing home sales across the United States rose 6.5 percent to an annual rate of 4.74 million units in December from a rate of 4.45 million in November, a National Association of Realtors report showed on Monday. That said, in 2008, existing home sales fell 13.1 percent to 4.91 million units -- the lowest since 1997...
"The report confirms our forecast that sales have bottomed," said Celia Chen, senior director of housing economics at Moody's Economy.com in West Chester, Pennsylvania.
"The price discounting on foreclosures is helping draw down on inventories, particularly in the West where lower prices are helping pull in new buyers," she said.