Existing-home sales rise 6.5% as prices plunge

Sales of existing homes rose 6.5% in December to a seasonally adjusted annualized rate of 4.74 million, led by a big rebound in the West where prices have fallen more than 30%, the industry trade group said. Sales in December were down 3.5% from the previous December.

About 45% of the transactions in December were considered distress sales, either a short sale or a home in foreclosure, the Realtors said. Many foreclosure sales are handled outside the Realtors' system and are not reported by the Realtors.

"Rising foreclosures and the large inventory overhang continue to exert downward pressure on prices," wrote Anna Piretti, an economist for BNP Paribas.

For 2008 as a whole, sales fell 13.1% to 4.91 million, the industry trade group said. November and December were the weakest sales months of the year on a seasonally adjusted basis as credit dried up.

The median sales price fell to $175,400 in December, down a record 15.3% compared with a year earlier. For all of 2008, median prices dropped 9.3% to $198,600, the lowest level since 2004.

The price decline is likely the largest since the Great Depression in the 1930s,