Existing-home sales still rising in Dec.

Existing-home sales continued to trend upward in December, with the eight-county Philadelphia region and the rest of the United States recording modest monthly and year-over-year gains.

Sales in the region were 5.3 percent higher in December than November and 4.8 percent above December 2010, Prudential Fox & Roach HomExpert reported.

National existing-home sales were 5 percent higher in December than November and 3.6 percent above December 2010, the National Association of Realtors said.

The region's median prices were 1.5 percent below November and down 6.3 percent from the previous year. Nationally, median prices were 2.5 percent lower than December 2010.

Realtors association chief economist Lawrence Yun called the numbers early signs of what may be a sustained recovery.

Other economists were able to pick out one unsettling trend among the positive ones: 33 percent of Realtors reported sales-contract cancellations in the month, the same percentage as in November and well above the 9 percent who reported them a year ago.

Many resulted because properties were not appraised at their asking prices.

"If you cannot get an appraisal that matches the contract price, mortgages cannot be written," said economist Joel L. Naroff of Naroff Economic Advisers in Holland, Bucks County.

Although 30-year fixed-interest rates fell to a record 3.88 percent this week, mortgage credit remained tight.

The situation may grow even tighter as a result of the decision announced Friday to toughen rules for Federal Housing Administration mortgages, which have become a major source of home loans since the housing bubble burst in 2006-07.

Regulations are being tightened to limit the FHA's risks and "strengthen its finances," HUD Secretary Shaun Donovan said in a statement.

A positive sign for the housing-market recovery is that the inventory of unsold existing homes has fallen both nationally and regionally.

Naroff believes, however, a major reason for the drop is that homeowners who want to sell are discouraged by how difficult the process has become.

On the other hand, the drop in inventory indicates the market may be near equilibrium - homes for sale slightly outnumbering potential buyers.

Jeffrey S. Detwiler, president and chief executive officer of Long & Foster, said sellers in South Jersey, for example, received an average of 93 percent to 95 percent of their asking price in December, "an indicator of movement toward a more balanced market between buyers and sellers."

Though those numbers suggest the housing glut is easing, IHS Global Insight economist Patrick Newport counseled caution.

He said other data suggested getting rid of the excess would be a drawn-out affair that would take at least two more years, noting that the Federal Reserve estimated about a fourth of the two million properties for sale at the end of the second quarter of 2011 were bank repossessions.

These repossessions, Newport said, are expected to total about one million in 2012 and in 2013.