The number of home sales shot up in the Baltimore metro region in December, bucking seasonal trends in what some called a fluke and others said points to a strong 2015 for the local housing market.
The sales of more than 2,740 homes closed in December, up nearly 27 percent from the same month the year before, according to a report from RealEstate Business Intelligence released Monday. Pending sales rose nearly 28 percent in the region, which includes Baltimore City and the five surrounding counties.
"It's certainly an indication that 2015 is going to be a really good year," said John L. Heithaus of RBI, a division of the MRIS multiple-list service. "You don't see that type of stuff in December with the holidays."
The flurry of activity capped a year of modest improvement, with little change in median prices and a moderate 4.5 percent increase in total sales.
In December, the median price in the metro region fell 1.7 percent to $230,000, increasing less than 5 percent year-over-year in Carroll, Howard and Harford counties, while holding steady in Baltimore County and dropping in Anne Arundel County and Baltimore.
For the year, the median price for the region dipped 0.2 percent.
Slow price appreciation in part reflected increasing supply. A 40 percent spike in short sales and foreclosures in Maryland in 2014 — which occurred as lending institutions worked through a backlog of defaulted loans — also suppressed the median price while fueling sales activity.
Short sales and foreclosures represented about 14.4 percent of the region's total sales last year and 22 percent of the region's sales in December, according to the RBI report.
Daraius Irani, economist for the Regional Economic Studies Institute at Towson University, said he expects housing activity in Maryland to remain moderate, calling the December activity a "fluke."
"I don't expect much from the housing market in 2015," he said.
But others said the trend in home values belies signs of steadily increasing confidence, as more sellers put homes up for sale and find buyers. The number of active listings rose by double digits in 10 of 12 months last year compared with 2013, while sales increased in all but four.
"It's been a long time and there's a lot of pent-up energy," sadi Azam Khan, an agent in Long & Foster's Lake Roland office. "I'm getting calls all the time."
Buyers in December went for single family houses, townhouses and condos, but it's the strength in townhouses — sales rose 26 percent, or by 206 transactions — that had Heithaus especially cheery.
Townhouses traditionally appeal to first-time homebuyers, who have yet to return to the market since the recession. Demand from that segment is key to the market overall, allowing other sellers to trade up, Heithaus said.
Relaxing credit standards combined with an improving economy and continued low interest rates could be about to usher in their return, he said.
"We're formally declaring 2015 the year of the millennial buyer," he said, adding that in the Baltimore area especially, home prices remain within reach of buyers with less savings.
Nationwide, economists said they expect the housing market to steadily improve in 2015, as a stronger economy spurs more people to strike out on their own, moving out of family homes and dropping roommates.
"We're seeing a normal level of home sales total," said Stephanie Karol, a U.S. economist for Massachusetts-based HIS Global Insight. "We have every reason to expect that as household formation picks up, sales will rise as well."
While there may be reason for optimism nationally, low expectations for Maryland job creation and wage growth should temper hopes for household formation here, said R. Andrew Bauer, a Baltimore-based economist for the Federal Reserve Bank of Richmond.
"It's a question of timing," Bauer said. "Things continue to get better, so you're moving forward, but you're not seeing a sustained, solid pick-up within the state."
Irani said younger buyers still are struggling to save, grappling with debt from college loans and lower-than-expected earnings in the years following the recession.
"A lot of things are conspiring, especially at the lower end … to keep these housing sales at a less-than-hot level," Irani said.
In Baltimore, foreclosures and short sales increased 60 percent in December, jumping to 229, or about 33 percent of the city's total sales. As a result, the city's median price plunged 36.5 percent last month, to $79,960.
For the year, short sales and foreclosures increased 42 percent in the city, representing one in four sales and dragging the median price down 6.5 percent, to $115,000.
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In Baltimore County, which counted 177 short sales and foreclosures among its 785 sales, the $210,000 median price in December rose $100 from 2013. The median price there increased 2.5 percent for the year.
Carroll County's median sales price rose 4.6 percent in December, to $291,951. It increased 1.1 percent for the year.
In Howard County the median sales price was $378,700 in December, up 1 percent from last year. Prices rose 1.3 percent for the year.
Harford experienced a 1.2 percent decline for the year, but posted a December median of $229,900, up 1.5 percent.