Existing home sales rose 6.5% in December

The latest existing home sales figures for December were just released. Here's a recap:

* Existing home sales popped 6.5% to a seasonally adjusted annual rate of 4.74 million from 4.45 million in November (originally reported as 4.49 million). That was better than the forecast for a reading of 4.4 million.

* The raw number of homes for sale dropped 11.6% to 3.676 million units. That's normal to see at year end, but the figure is also down 7.5% from the year-ago level. The months supply at current sales pace indicator of inventory dropped to 9.3 from the 11.2 cycle high set in November and April of 2008.

* The median price of an existing home dropped 2.7% to $175,400 from $180,300 in November. That was also down 15.3% from $207,000 in the year ago period. That's the biggest decline so far, and it leaves existing home prices at the lowest level since May 2003 ($175,200).

Americans love a bargain, and the housing market is no exception. Nationwide home prices dropped by the most on record in December, slumping to the lowest level in almost six years. That caused some bargain hunters to step off the sidelines.

The increase helped to reduce the mountain of property for sale as well, exactly what we need to see if the housing market is ever going to get back to a state of equilibrium. The key question going forward: Can the momentum be sustained in the face of rising unemployment and tighter lending standards? Only time will tell. But it's hard to imagine a lasting turn in the housing market with thousands of layoffs being announced every few days.