Home sales down again in 2010; December might offer hope

In Central Kentucky, 2010 proved to be an up-and-down year for home sales. Despite tax credits that boosted purchases in the first half of the year, sales continued annual declines that started in 2006, according to data released this week.

The year ended with a slight reprieve, as sales grew in Lexington and the drop-off slackened in the region — a possible indicator that a turnaround is imminent. The number of building permits for homes in the city continued to decline, however.

For the full year, single-family residential sales in 16 Central Kentucky counties fell 8.8 percent to 6,719, according to the Lexington-Bluegrass Association of Realtors. The inventory of homes available for sale increased as the year came to a close, as did the average time a home sits available for sale.

There was a bright spot: a 1 percent increase in the median sales price of homes sold. While low, the growth came as many areas of the nation continued to suffer declines in prices throughout the year.

The bulk of sales for the year came during the first half, when federal home buyer tax credits offered $8,000 to new home buyers and $6,500 to repeat buyers. As the year progressed, year-over-year sales declines grew as the lack of tax credits stalled purchases and 2010 sales were compared with months in 2009 that saw boosts from tax credits. The percentage drops ranged from 24 percent in August to 40 percent in October.

December marked a major change in that measure as single-family home sales were down just 12 percent across Central Kentucky. Sales also grew from month to month for the first time since May. The time a home spent on the market decreased, while the residential median sales price grew almost 6 percent.

Lexington outpaced the region with 4 percent growth for December: 261 sales closed versus 251 in December 2009. For the year, though, sales were down 9.1 percent in the city to 3,568.

LBAR President Barbara Curtis was not available Wednesday to comment on the data.

Tim Haymaker, owner of Lexington's Haymaker Development Co., said December could prove to be "a modest sign of things to come." He said he attributes some of that to interest rates.

"There was an uptick in interest rates toward the end of the year, and I think there's been an attitude among a lot of people that they were just going to sit back and let it get lower and lower," Haymaker said. "Well, when that uptick came, it was fairly clear that some people thought they were missing the train and got on it real quick."

Echoing a favorite phrase of home builders and sellers, Haymaker said now is the "best time to buy" because of those rates.

"When I got started in the business in 1972, my rate book only went down to 7 percent," Haymaker recalled. "Interest rates are almost half of that today."

Haymaker said he saw an uptick in sales of his company's homes in the latter half of the year. While "it's certainly no return to where it was, it's a definite improvement," he said.

Todd Johnson, executive vice president of the Home Builders Association of Lexington, said a builder told him recently that he had sold six homes in recent weeks.

"Any sign of improvement in the economy is a good sign of improvement ..." Johnson said. "It's in a lower-price-range market, but any movement is good."

That momentum has not extended to city-issued building permits for construction of single-family homes or duplexes. For 2010, the city issued 628 such permits, down 18.4 percent from 2009, said Dewey Crowe, director of Lexington's Division of Building Inspection. Crowe also noted that the number of permits trended down as the year progressed.

"To me, that says the housing market still has not started a recovery," Crowe said. "We're still looking for a bottom."

The total number of permits issued by the division was down 2.7 percent for the year, to 13,340.

"What we're seeing in those numbers is a lot of small projects," Crowe said. "We see a lot of small renovations to homes, small additions and remodeling projects to homes, instead of people selling them to buy a new one."

Johnson said he expected to see numbers like that.

"As to what that means in 2011, I don't know if it means anything for 2011," Johnson said. "People are still feeling their way around this economy."