Average sales prices in the Western United States dropped year over year by almost 27 percent, which gave buyers incentive to jump off the fence at the second highest level for the year. Pending sales jumped 36 percent in December, compared to a year earlier, according to the National Association of Realtors.

In the California Association of Realtors 2008 market wrap up senior research analyst Oscar Wei says, "Annual sales of existing homes for 2008 increased 26.7 percent from a revised 2007 figure of 346,940 to 439,740 in 2008. Large year-to-year percentage gains in sales will likely continue … ."

The more telling side of the coin is that prices are declining month by month at a much smaller rate -- only 2 percent from November to December. (Year over year, the average sales price was down 38 percent statewide.

Another sign of the strong recovery is demonstrated in the supply side number. "The unsold inventory index was 5.6 months in December, down from 6.9 months a month earlier and was less than half of the inventory level of 13.4 month a year ago. The index has been below the long run average of 7 months since July 2008, and the current inventory level of 5.6 months was the lowest since March 2006," Wei says.

Published: February 13, 2009

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Mr. Carr is an award-winning real estate broker in Northern Virginia and authored "Real Estate Investing Made Simple: a commonsense approach to building wealth." He also contributed to Donald Trump’s book, "The Best Real Estate Advice I Ever Received," and is an active trainer and coach of top producers in the Washington DC market. As a sought-after expert on real estate, Mr. Carr has been featured on CNN, various broadcast outlets and was the former real estate editor for The Washington Times. He accepts questions at his blog www.RealEstateOlogy.org.