Housing Affordability Driving Sales Increase

Low mortgage rates and home prices helped fuel a sharp increase in home sales during the month of December, according to the National Association of Realtors.

The group says existing-home sales during the month took place at an annual rate of 5.28 million, which was up more than 12 percent from the previous month as analysts said the report was a good way to end the year.

"The December pace is near the volume we're expecting for 2011, so the market is getting much closer to an adequate, sustainable level," said Lawrence Yun, NAR chief economist. "The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain."

The rising pace of sales also helped drive down the nation's housing inventory, which has been inflated for several months, dropping it from 9.5 months to 8.1 months. A balanced market, according to the group, has roughly a 6-month supply.

One of the biggest reasons for higher sales is that home prices have fallen significantly from the peak levels from the housing boom. According to the Case-Shiller home price index, home prices in October were roughly the same as they were in mid-2003.