Another measure of prices, the S&P/Case-Shiller index of homes in 20 cities, most recently showed home values increased 4.3 percent in October from a year earlier, the biggest gain since May 2010. The gauge is up almost 9 percent since reaching a 10-year low in March.
The number of previously owned homes on the market dropped to 1.82 million, the fewest since January 2001, according to today’s report. At the current sales pace, it would take 4.4 months to sell those houses, the lowest since May 2005, compared with 4.8 months at the end of November.
Inventory Concern
“The only concern going into 2013 is the inventory situation,” Lawrence Yun, NAR chief economist, said in a news conference today as the figures were released. “Price increases are almost guaranteed going into 2013.”
Record-low borrowing costs underpinned housing gains last year. The average rate on a 30-year, fixed mortgage was 3.38 percent last week, hovering near the 3.31 percent reached a month earlier that was the lowest in data going back to 1972, according to McLean, Virginia-based Freddie Mac.
Progress will probably build in 2013. Sales of existing homes will rise about 7.2 percent to 4.98 million this year, the highest since 2007, according to the median estimate of economists and housing analysts surveyed by Bloomberg. Prices will gain 3.3 percent after an estimated 4.5 percent jump in 2012, according to the forecasters.
“After seven years of navigating an unprecedented market downturn, we finally saw stabilization and recovery in 2012,” Stuart Miller, chief executive officer of Lennar Corp., the largest U.S. homebuilder by market value, said during a Jan. 15 earnings call. “While there have been and still are economic and political uncertainties ahead, we feel that this housing recovery is fundamentally based and driven by a long-term demographic need for housing. 2012, therefore, we believe is just the beginning of the recovery.”