Palm Beach County home sales ended 2014 with a 20 percent gain in closed deals, but a December dip in prices may foreshadow a year of single-digit appreciation.

The median sales price for an existing single-family home in Palm Beach County last month was $275,000, nearly 2 percent below the same time in 2013, according to a report released Friday by the Realtors Association of the Palm Beaches.

Statewide, 16 percent more homes sold in December than the previous year and prices were up 7 percent to $185,000.

Bill Richardson, managing broker for Keyes Realty in Boca Raton, said Palm Beach County’s price decrease has more to do with an influx of foreclosed homes onto the market than a genuine drop in value. Sales of bank repossessions, which usually sell at lower prices than traditional deals, were up 50 percent in December from the same time in 2013.

“A lot of the older foreclosures have been coming on the market, the stuff that has been lingering in the system for a while,” Richardson said. “Prices are not going down on regular inventory.”

The recent sale of a $320,000 home in the Boca Fontana community garnered multiple competing offers, Richardson said. And although he expected the buyer’s loan to be jeopardized by a low appraisal value, the deal went smoothly with an appraisal equal to or above the sale price.

“Good appraisals are a sign that the market is working again,” Richardson said.

Still, economists expect Florida home prices to increase at a more normal pace in 2015, rising 4 percent to 6 percent compared to the two previous years, which saw double-digit leaps as investors bought up discounted homes with cash.

All-cash deals made up 45 percent of Palm Beach County home sales in December, nearly 9 percent lower than in 2013. Statewide, cash sales made up 38 percent of December home purchases, down 10 percent from the previous year.

“We’ve always had a fairly high number of cash sales because we have retirees,” said Brad O’Connor, director of economic research at Florida Realtors. “Investor participation is starting to decline slightly, but that doesn’t mean they are going to all jump out at the same time.”

On a national level, home sales rebounded in December, climbing 3.5 percent from the same time last year, but total sales for the year finished 3 percent below 2013. The year-end sales price nationally was $208,500, the highest since 2007, and a 5.8 percent jump from 2013.

Total housing inventory nationally dropped 11 percent in December, which represents just over a 4 months’ supply. The decrease led National Association of Realtors Chief Economist Lawrence Yun to warn of price jumps as people compete for fewer homes.

“Minimal selection and the potential for faster price appreciation could offset the demand from buyers encouraged by a stronger economy and sub-4 percent interest rates,” Yun said. “Housing costs — both rents and home prices — continue to outpace wages and are burdensome for potential buyers trying to save for a down payment while looking for available homes in their price range.”

According to Freddie Mac, the average interest rate for a 30-year, fixed-rate mortgage in December fell to 3.86 percent, its lowest level since May 2013, and down from 4 percent in November.

Palm Beach County’s inventory of single-family homes for sale in December was 5.5 months’, which is close to the 6-month supply usually considered a balanced market. Inventory statewide was at 5.2 months’ in December, a 6 percent decrease from the same time in 2013.

Richardson believes more first-time buyers will enter the market in 2015 with incentives such as a mortgage insurance rate cut on FHA loans and a Federal Housing Finance Agency program that allows for loans with as little as 3 percent down.

Boomerang buyers — people who went through a foreclosure or short sale but are able to buy again after years of renting — are also starting to return to homeownership, Richardson said.

“As their leases come up for renewal, they are inquiring about buying and getting preapproved in what has become a pretty good real estate market,” Richardson said.

by Kimberly Miller