Existing Home Sales Drop

During the month of December, existing home sales dropped more than expected.

According to the National Association of Realtors, existing homes sales dropped 16.7 percent to a seasonally adjusted annual rate of 5.45 million units.

Experts had expected December sales to reach 5.9 million annual units.

"We'll see a pickup in existing home sales in the next couple of months" as people take advantage of the tax-credit extension, said Adam York, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who forecast a 5.4 million sales pace. Although "we're past the bottom," he said, "I don't think there's going to be a lot of buyers out there looking for a home outside of the tax-induced effects until they feel more comfortable with the labor market."

During 2009, there were 5,156,000 existing home sales, which was 4.9 percent higher than 2008's total.

During November, home buyers rushed to purchase homes to qualify for the first time home buyer tax credit, which helped existing home sales gain 7.4 percent.

Experts believe the tax credit will help boost the housing market as did the Cash for Clunkers helped auto sales.

"Since Cash for Clunkers has been over, autos have seen stronger and more sustainable sales -- and that's a function of a better economy," Thomas said. "That means home sales are likely to follow."