WASHINGTON (TheStreet) -- Sales on previously owned homes tumbled at a record rate in December, after the government extended a deadline to capitalize on a popular tax credit.
The National Association of Realtors said existing home sales dropped 16.7% to a seasonally adjusted annual rate of 5.45 million units in December. The percentage drop was the largest on record.
Sales surged 7.4% in November after posting a 6.54 million rate. The December showing was well below consensus forecasts by analysts calling for 5.9 million units.
The NAR said the decline was expected. First-time buyers scurried to take advantage of a home buyer tax credit before its original expiration in November, fueling a buying surge from September through November. But lawmakers extended the deadline to April and offered a separate credit to include existing homeowners.
"It's significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit," NAR chief economist Lawrence Yun said in a press release. "We'll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010. However, the job market remains a concern and could dampen the housing recovery - job creation is key to a continued recovery in the second half of the year."
However, the report said that median prices rose to $178,300 in December, landing 1.5% higher when compared to year-ago levels.
Several home builder stocks pared gains after the release.
were up 2.1%, 0.8% and 0.8%, respectively.
Shares of Toll Brothers turned negative, declining 18 cents, or 1%, to $18.10.
was shedding 0.5%, as
was advancing 0.1%.
--Written by Sung Moss in New York