"Though it's better than expected, we're still not getting a serious rebound," said Doug Roberts, chief investment strategist for Channel Capital Research. "This is a U-shaped situation, where we can have monthly blips when it's positive, but we're going to be bouncing along the bottom for a while."
Sales may have been boosted by homebuilders clearing out inventories at discounted rates at the end of the year, he said.
8 reasons to invest in your home"People like to get their books in order at the end of the year," Roberts said. "It's akin to retailers clearing out inventory -- it's not getting any better so they don't want to hold onto it."
To clear out this inventory, Roberts said homebuilders have been offering special deals, like offering to throw in a granite counter-top instead of a standard one.
The median sales price of new homes was $241,500, up from $215,500 the month before, the government reported. At the end of December, 190,000 new homes were for sale, equal to a 6.9-month supply at the current pace.
While inventory was down from the 8-month supply available at the end of November, Roberts said homebuilders worry that foreclosures entering the market could cause supplies to swell.
12 cities: Where to rent vs. buy"Foreclosures can act as competition to new home sales, so if they really start to resume that could have a negative impact," he said. "When banks take possession, they have to pay insurance and are responsible for taxes -- so everyone is saying they hope the situation improves so they don't have to write down more foreclosures, but they aren't disappearing yet."
Roberts said it will likely take a couple of years -- and maybe even five or six -- for homebuilders to make a significant dent in inventories and for home sales to really begin recovering.
"Housing tends to be a long cycle, where it does really well for a long time and then you go down and stabilize for a long time as well," said Roberts. "For now sales will bounce up and down, but long term I don't think anyone is talking about a shortage of homes out there."
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