For new or existing home sales, December was a bleak month. Following Monday's report that existing home sales dropped sharply, the Commerce Department reported today that new home sales fell 7.6% m/m to 342,000 from an upwardly revised November level. The latest was the fourth decline in the last five months. December sales were the lowest since last March and off 75.4% from the 2005 peak. Near term home sales should be helped by the recent extension of the Federal government's tax credit which now it is for all home buyers and not just first-time purchases. The December sales figure fell well short of Consensus expectations for 370,000 sales.

The December results capped a dismal year. For 2009 as a whole new home sales totaled 372,000 which was the lowest level since the numbers were first tallied in 1963.

Home prices firmed during December though the November figure was revised down. The median price of a new single-family home rose to $221,300 which was the highest level since May. The increase pared the y/y decline to 3.6% from its worst of -14.5% this past February. For all of 2009 median home prices fell 7.3% after a 5.5% decline during 2008.

Price discounts and lower housing starts drove down the inventory of unsold homes by more than one-third y/y to its lowest since early-1971. The months' supply of unsold homes rose modestly to 8.1 months but remained down from the high of 12.4 months in January '09. Despite the shrinkage of inventory, it still took a record median 13.9 months to sell a new home.

Inflation: Mind the Gap from the Federal Reserve Bank of San Francisco is available here.