Numbers tell the tale

As unfathomable as it seems the housing market is slowly validating the minority of people who claim we are experiencing a recovery.  According to CAR....California home sales rose in December, posting their highest level since May.
"December's sales increase reflects buyers taking advantage of rock bottom interest rates and improved affordability since the first half of the year, when prices were higher," said C.A.R. President Beth L. Peerce. "December's sales opened escrow in October and November. Rates hit their absolute lowest in October but began edging higher in November, prompting buyers to get off the fence,"

However, with yesterday's horrific auction of TIPS, investors appear to have given up on the idea that inflation is going to play a significant role in monetary policy.  This is also evidenced in the fact that rates have been trending higher into the new year.  The problem with that is a small rate jump will get people off the fence as the CAR President said.  However, a more than gradual rise in rates consistently throughout the year might just push people off the fence as their affordability dwindles. 

Here is summation of the rest of the report:

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 520,680 in December.  December's sales were up 5.9 percent from November's revised pace of 491,590 but were down 6.8 percent from the revised 558,840 sales pace recorded in December 2009. The statewide sales figure represents what would be the total number of homes sold during 2010 if sales maintained the November pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
Following three consecutive monthly declines, the median price of an existing, single-family detached home sold in California increased 1.7 percent from a revised $296,690 in November but was down 1.6 percent from the revised $306,860 median price recorded for the same period a year ago.

"While sales rose in December, the sales pace in the second half of the year was lower than the first half as the housing market weaned itself off home buyer tax credits," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "For 2010 as a whole, sales reached 494,900 homes sold, down 9.5 percent from the 546,860 homes sold in 2009. However, the statewide median price increased 10.2 percent to reach $302,900 for the year, up from the $275,000 recorded in 2009," she said.
A greater than usual drop in listings combined with the sales increase caused C.A.R.'s Unsold Inventory Index to decline more than one month. The Unsold Inventory Index for existing, single-family detached homes was 5.0 months in December, down from 6.2 months in November. The index was 3.8 months in December 2009. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate. The median number of days it took to sell a single-family home was 57.5 days in December 2010, compared with 35.1 days for the same period a year ago.

Source:  BusinessWire