Home sales rise in December as prices slide

Home sales rebounded in South Hampton Roads last month as prices continued to decline, according to a report released Friday.

The Real Estate Information Network, the Virginia Beach-based multiple-listing service, reported that 938 existing homes sold last month, up 10 percent from November and 12 percent from December 2010. It was the sixth consecutive month of year-over-year increases in sales.

Yet prices continued their downward march. Last month marked the 13th consecutive month of year-over-year declines in median existing home prices.

The median price was $179,000 in December, down slightly from November and 10.5 percent lower than a year earlier, the local listing service reported.

"I don't want to say we've hit the bottom, but I certainly think we're moving in the right direction," said Ron Foresta, president of Rose & Womble Realty Co.'s resale division. "We're hearing that our agents have a lot more people that they're working with than they have in a while."

Foresta said some of the activity is being driven by low mortgage interest rates.

"The interest rates have come down far enough I think people are finally starting to realize they might need to go ahead and take advantage of them," he said.

Increases in the sales volume can be attributed in part to distressed sales, which played a major role in Hampton Roads in the past year. Last month, foreclosures and sales by homeowners whose homes are worth less than their mortgage balances - known as short sales - accounted for 33 percent of all sales.

"The market these days is being driven by distressed sales," said Vinod Agarwal, an economist at Old Dominion University. "They're selling faster and the non-distressed are not selling as fast."

While foreclosures and short sales as a portion of all sales have been elevated in recent months, they are still well below the 42 percent high reached in May.

In recent months, the number of homes for sale across the region has been falling. Last month, 11,095 homes were on the market, down 8.8 percent from November and off 18.7 percent from a year earlier.

That's the lowest point in more than four years. At the current sales pace, it would take a little more than seven months to sell the backlog of homes. Six months of inventory is considered normal.

"The concern that I have right now," Agarwal said, "is that even though the total inventory is going down, the proportion of distressed listings is about the same."

Despite the pickup in sales, Agarwal said the market is still soft, partly evidenced by the average time a home stays on the market before being sold, which reached 111 days in December - the longest in more than four years.

Josh Brown, (757) 446-2318, josh.brown@pilotonline.com