Existing home sales in the U.S. increasing in December, helping to bring home sales in 2013 to the highest level since 2006, according to the National Association of Realtors.
In 2013 the number of homes sold reached 5.09 million, increasing 9.1 percent from 2012. This represents the strongest performance in seven years when sales reached an "unsustainably high" 6.48 million at the end of the housing boom, NAR reports.
"Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates and a large pent-up demand driving the market," Lawrence Yun, NAR chief economist, said in the report. "We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population."
Home sales of all types -- single-family, townhomes, condominiums and co-ops -- increased 1.0 percent to a seasonally adjusted annual rate of 4.87 million in December from a downwardly revised 4.82 million in November.
The NAR report also showed a yearly increase in home prices. The median existing-home price was $197,100 in 2013, a 11.5 percent increase from the 2012 median of $176,800. This was the strongest gain since 2005 when it grew 12.4 percent.
In December, the median price was $198,000, increasing 9.9 percent from a year ago.
Foreclosure and short sales accounted for 14 percent of December home sales, unchanged from November, but lower than the 24 percent share in December 2012.
The housing inventory in the U.S. fell 9.3 percent to 1.86 million existing homes available for sale. This represents a 4.6-month supply, down from the 5.1 months in November. A six-month supply is generally considered a healthy market by analysts.
Mortgage rates have been fluctuating in the last couple of months, a factor that could keep buyers out of the market. In December, the national average for a 30-year, fixed-rate mortgage increased to 4.46 percent from 4.26 percent in November, according to Freddie Mac.
First-time homebuyers accounted for 27 percent of purchases in December, down slightly from 28 percent in November and 30 percent in December 2012. All-cash sales accounted for 32 percent of sales, unchanged from the previous month.
Going forward, home sales should grow despite rising home prices and higher mortgage rates, the report finds.
"The only factors holding us back from a stronger recovery are the ongoing issues of restrictive mortgage credit and constrained inventory," Steve Brown, NAR president, said in the report. "With strict new mortgage rules in place, we will be monitoring the lending environment to ensure that financially qualified buyers can access the credit they need to purchase a home."