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“New numbers on the housing market this morning, the National Association of Realtors reported sales of existing homes plunged by 16.7% last month.  That’s the largest monthly drop in 40 years.” (MSNBC)

The $8,000 tax credit led to an increase in sales through November.  Despite the increase, The National Association of Realtors reports record low sales, in December.  Analysts hope the April extension will attract future buyers. But, why did the housing market plunge and what will that mean in 2010?

We’re looking at perspectives from The Washington Post, CNBC, MSNBC and CNN.  

The Washington Post cites a decrease in first-time buyers as one cause of the decline.

“First-time buyers, who had made up more than 50 percent of sales earlier this year, were only 43 percent of the market in December. The shift also resulted in fewer sales of lower-cost homes, which first-time buyers typically seek.”

The ending of the federal housing stimulus plan in April, may lead to another slump in the market. On CNBC, National Association of Realtors chief economist, Lawrence Yun, says jobs are the key.

“So, it begs the question, with government stimulus gone by summer what’s the key factor in housing? ‘Jobs, jobs, jobs, right now the home sales have been rising despite falling jobs but in the second half of the year we really did need to get that job creation for the healthy market.’”

MSNBC says the drop off was caused by the original ending date for the tax credit.

“The governments first-time homebuyers program had been slated to expire in November so that kept many people out of the market.  But as we now know, that program was extended through April.”

There is still hope for improvement, and, as one CNN analyst points out, the December low has an up side.  

“But if you’re looking for the glass is half full in that housing report, there are some, and come on, we can’t expect the housing market to all of a sudden be healthy.  Sales rose 5% for all of the calendar year, 2009, and rose from December to December. That was the first annual gain we’ve seen since 2005 and prices firmed.  The median price rose 1.5% from December 2008. Ok, I mean, it’s still low, but it’s going in the right direction.  And I mean, you’re right, housing, like everything else, will depend on jobs.”

So what will 2010 look like for the housing market and why do you think existing home sales dropped?

Writer: Amanda Heisey

Producer: Nathan Giannini