· The National Association of Realtors reported that sales of existing homes fell 16.7% from November as a since-extended tax credit for first home buyers was due to expire. The decline to 5.450M units (SAAR) followed a little-revised 7.4% rise and similarly strong gains back through July. The fall in December home sales greatly exceeded Consensus expectations for decline to 5.90M.

· For all of last year, the tax credit, along with improved affordability, raised home sales by 5.5% from 2008. However, that recovery made up only a piece of larger declines during the prior three years. As a result, total sales last year remained 27.0% below the 2005 peak.

· Total sales include sales of condos and co-ops. Sales of existing single-family homes alone fell 16.8% from November to 4.790M but remained up 18.3% from the January low. For all of 2009, sales rose 5.4% after sharp declines during the prior three years. (These data have a longer history than the total sales series). Sales of condos and co-ops fell 15.4% m/m but were up by one-third from the November '08 low. 

· Sales have been helped by a recently extended tax credit for first-time home buyers. The credit of up to $8,000 now runs though April 30. Additionally, a new credit of up to $6,500 is available to some existing home owners who move. The full details of the home-buyer tax credit can be found here.

· The median price of all existing homes jumped 4.9% last month to the highest level since July. The median price for a single-family home alone was strong, rising 4.8% to $177,500 (1.4% y/y). For the year as a whole, however, weakness in home sales pulled prices lower. The 11.6% decline from 2007 was the third consecutive year of decline. Prices remained down 22% from the 2007 monthly peak. Price weakness sharply raised home affordability; by 7.8% since July and by two-thirds from the 2006 low. The median family income for existing home buyers was $60,034 and mortgage payments amounted to 14.9% of that total.

· The number of unsold homes (single-family & co-ops) for sale fell a sharp 6.6% (-11.1% y/y) during December to the lowest level since March  2006. At the current sales rate there was a 7.2 months' supply of homes on the market, near the lowest since late 2006. The latest figure was down from a high of 11.3 months during April of 2008. For single-family homes, the inventory fell to a 6.9 months' supply, the lowest since March 2007. 

· The data on existing home sales, prices and affordability can be found in Haver's USECON database. The regional price, affordability and inventory data is available in the REALTOR database.

· Alt-A: The Forgotten Segment of the Mortgage Market from the Federal Reserve Bank of St. Louis is available here.