Home Sales Down, Median Prices Up

The December home sales numbers are in, and now we have a picture of what the real estate market would look like without the support of the first-time homebuyer tax credit.

Don't worry, the credit is still available through April (you have to be in contract by April 30 and close by June 30), but the December closings came right after it first "expired" -- there had originally been a deadline of closings by November 30, 2009.

So December 2009 buyers are more likely to be buyers who wanted a house irrespective of subsidy.

There are fewer of them, according to Alan Zibel of the Associated Press. In December, the volume of home sales dropped 17 percent.

Which is bad news, and I'm sure that the housing bears are going to be all over it.

However, that still puts us at a seasonally adjusted annual rate of 5.45 million homes. While that's not as great as the over 6 million numbers we saw during the boom, but it's not as tragic as the sub-5 million numbers we saw in the trough of the bust either.

Even better, the median sales price was up 1.5 percent from a year earlier. It's still only $178,300, but the rise from a year ago is significant because that's the first time this has happened in two and a half years.

There are still some distortions left in the system. We should still get some bounces in home sales as a second wave of first-time buyers rushes to pocket the 2010 credit -- those will likely be jumps in February and March.

Most importantly though, the market still has one major support -- low interest rates. It will be interesting to see if annual volume stays in the mid 5-million range if rates jump by a point or so this year, as many experts predict.