Existing home sales did rise in December (hooray!) but prices continued to fall fast. (Rats!).
The worst of the news is the way that sales in California (Collie-fornia, for natives) and the West have surged as prices there have plunged. In the West prices are down by over 30% Yr/Yr and over the past year, sales of existing homes are up by about thirty percent. That's about an elasticity of unity if you are an economist. But it does not work anywhere else in the country apparently since dropping prices by 20% has only left sales elsewhere still in a state of decline.
Now there have been some programs to aid sales and to forestall bankruptcy. The Fed has cut rates a lot and it has started its special purchase of mortgage-backed securities to try and drive mortgage rates even lower. Meanwhile home affordability has surged higher. But in the end it is only the WEST that is doing well. What does THAT tell us?
Unfortunately what THAT says is that people who could afford homes and who could get financing do not think that the downside in housing is over to a significant degree except in the WEST.
That's a real bummer.
Low mortgages rates do help with home affordability, but if you can afford it but you think the price will fall you probably shun it like a leper- even if it is a beautiful leper...
So that is the bad news. Home prices in the WEST have dropped by some 40% from their peak compared to a peak-to-now drop of 20% elsewhere in the country- That is a big difference. It makes a big difference, too, in how people view value in the housing market. The West has gone from being the priciest region to the second priciest as it has been overtaken by the Northeast. But since prices in the NE probably need to fall by a lot we will keep track and see how long that lasts.
Sorry for the bad news.
Back to saving for that down payment... Look at the bright side: you might have it by the time house prices stabilize.