surprising strength shows on Home sales in December

Sales of existing homes posted an unexpected increase last month, as sales of bargain-basement foreclosures in California and Florida boomed, closing out the worst year for the U.S. real estate market in more than a decade.

Analysts, however, cautioned that prices are likely to keep falling through 2009, and said the outlook for home sales is highly uncertain, despite a boost from low mortgage rates.

“I don’t think we’re close to a bottom yet,” said Michelle Meyer, a Barclays Capital economist who sees nationwide prices falling another 15 percent this year. “We’re still very far away from a normal housing market.”If President Barack Obama’s administration enacts a plan to keep borrowers in their homes, Meyer said, that might stop some foreclosures from flooding the market, but it’s still unclear how successful any government efforts will be.

Sales of existing homes rose 6.5 percent to an annual rate of 4.74 million in December, from a downwardly revised pace of 4.45 million in November, the National Association of Realtors said Monday. Without adjusting for seasonal factors, sales nationwide were up 1.1 percent from a year earlier, reflecting a surge of more than 36 percent in the Western states.

The nationwide median sales price plunged to $175,400, down 15.3 percent from $207,000 a year ago. That was the lowest price since May 2003 and the biggest year-over-year drop on records going back to 1968. With sales of foreclosures and other distressed properties making up about 45 percent of sales, many economists expect prices to keep falling.

For all of 2008, there were 4.9 million existing home sales, down more than 13 percent from a year earlier, and the lowest total since 1997.

Making matters worse, layoffs continue to accelerate as the recession deepens.

Home Depot Inc. said Monday it plans to eliminate 7,000 jobs while closing four dozen of its smaller home improvement stores. Sprint Nextel Corp. said it is eliminating about 8,000 positions as it seeks to cut costs.

Experts say that when the housing market turns around, price increases are likely to be modest.

“We have another year to go of soft home prices, primarily at this point because of the recession and job losses.” Norm Miller, a real estate professor at the University of San Diego, said in an interview last week.

One encouraging sign — the number of unsold homes on the market in last month fell nearly 12 percent to 3.7 million, the lowest level since January 2007. At the current sales pace, it would take 9.3 months to sell all the properties, down from 11.2 months in November.

However, Patrick Newport, an economist with IHS Global Insight, noted that the Realtors’ group tends to underestimate the inventory of homes on the market because many foreclosures are sold through auctions.

Lawrence Yun, the trade group’s chief economist, called on lawmakers to include tax credits for home buyers in the economic recovery package being considered by Congress.

He said, “The economy just simply cannot recover as long as home prices continue to decline.”

Fannie Mae may need another $16 billion in aid

Mortgage finance company Fannie Mae said Monday that it likely needs up to $16 billion from the government as conditions in the U.S. housing market continue to deteriorate.

Fannie Mae’s disclosure that it expects an injection of $11 billion to $16 billion in taxpayer aid comes after sibling company Freddie Mac disclosed last week that it’s likely to require as much as $35 billion in federal support on top of the $13.8 billion it received last year.

Fannie, which has yet to receive any government aid, said in a Securities and Exchange Commission filing that the actual amount needed “may differ materially from this estimate” because its fourth-quarter financial statements are still being prepared.

Home prices drop by record pace in November

Jacquie Jacobs has lived in San Diego all her life, and finally now, she can afford to buy a house there. That's the bright side of plunging home prices.

"I love it here, but for so long it's been out of my reach to buy a home," said Jacobs, a 32-year-old utility inspector.

Not anymore. San Diego home prices fell nearly 26 percent year-over-year in November, according to Standard & Poor's/Case-Shiller housing index released Tuesday. And with mortgage rates near historic lows, Jacobs, who says she has good credit and a small down payment, is taking a stab at homeownership.

Home you save could be your own

Luis Molina is not a lawyer and he has never played one on TV.

But that didn’t stop him from putting on his best suit, marching into a Miami courtroom this month and going up against an attorney with 30 years of experience to stop a foreclosure proceeding against his family’s home. Molina did such a good job of representing himself that the judge in the case thought he was a lawyer and punctuated his ruling in Molina's favor by tearing up the other side’s motion for summary judgment and throwing it over his shoulder.

“I felt like a million dollars,” Molina told msnbc.com, describing his day in Judge David C. Miller's courtroom in Florida’s 11th Judicial Circuit Court. “I felt like if there was anything in my life that I had done correctly, it had to be that. Every single lawyer after the fight came over and shook my hand.”

Both parties suddenly move to aid homeowners

Four months after Congress tried to rescue the economy with a $700 billion bailout for the financial industry, Republicans and Democrats are suddenly competing to bail out financially struggling homeowners.

Having spent hundreds of billions of dollars rescuing financial institutions, only to see the economy spiral even deeper into crisis, liberal and conservative economists and lawmakers are pushing to redirect the economic stimulus bill to what they say is the core problem: the housing market.

Senate Republicans are seeking new tax breaks and up to $300 billion in mortgage subsidies to attract homebuyers. Democrats want to spend at least $50 billion on federal programs aimed at reducing mortgage foreclosures.

sales at slowest rate on record On New homes

Sales of new homes plunged to the slowest pace on record last month as the hobbled homebuilding industry posted its worst annual sales results in more than two decades.

The Commerce Department said Thursday that new home sales fell 14.7 percent in December to a seasonally adjusted annual rate of 331,000, from a downwardly revised November figure of 388,000.

“This is an awful report. ... Builders just can’t cut back fast enough, so prices remain under downward pressure,” Ian Shepherdson, chief U.S. economist for High Frequency Economics, wrote in a research note.

post increase of 6.3 percent in Pending home sales

Buyers wade back into market as prices fall along with mortgage rates

An index that tracks signed contracts to purchase existing homes rebounded in December, as buyers snapped up properties at deep discounts, especially in the South and Midwest.

It was the second positive sign in the past two weeks for the troubled U.S. housing market, and may indicate that a bottom is forming — at least for home sales. Analysts, however, caution that prices are likely to keep falling through 2009, and say the outlook for home sales is uncertain, especially as layoffs mount and banks’ lending standards remain tight.

“Buyers are dipping their toes back into the housing market, but they have yet to really take the plunge,” wrote Joel Naroff, chief economist with Naroff Economic Advisors.