The 16.7% percentage decline from November to December was the largest on record, dating back to 1968, the National Association of Realtors reported.
The decline was larger than the 11% drop to 5.80 million that was expected by economists surveyed by MarketWatch. Read our complete economic calendar and consensus forecast.
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The median sales price rose to $178,300 in December, up 1.5% compared with a year earlier. It's the first year-over-year increase in prices since August 2007.
For all of 2009, sales rose 4.9% to 5.16 million compared with 2008. The median price fell 12.5% in 2009.
"The market is going through a period of swings driven by the tax credit," said Lawrence Yun, chief economist for the real estate lobbying group. "We're likely to have another surge in the spring."
"Job creation is the key to a continued recovery in the second half of the year," Yun said, adding he believed there was some sustainable momentum in the market. December's sales pace was up 11% compared with June's.
But buyers didn't know the credit would be extended when they were shopping for homes in October. In order to close in December, they would have had to sign a sales contract by early November at the latest. Existing-home sales are recorded at the closing.
First-time buyers accounted for 43% of sales in December, down from 51% in November.
Inventories of unsold homes on the market dropped 6.6% to 3.29 million, the lowest since March 2006. The inventory figures are not seasonally adjusted. Inventories usually fall about 8% this time of year.