In the words of one economist, 2010 was a year the real estate industry would rather forget.

While many metropolitan areas saw record numbers of foreclosures, the year closed with a 17.5 percent surge in new-home sales in December from November, with the West leading the charge, according to data released Wednesday by the Census Bureau and the Department of Housing and Urban Development.

Industry observers noted a strong increase in sales of previously owned homes in the West during the same month, and attributed both spurts to employment growth in that region.

But economist Patrick Newport, of IHS Global Insight in Lexington, Mass., said that a December surge in housing starts and permits in California was likely the result of a rush of builders obtaining permits before new construction codes took effect.

That was something even National Association of Home Builders chief economist David Crowe acknowledged in his more positive view of December's numbers.

The California situation was similar to one in New York City in June 2008, when multifamily builders made a mad dash for permits before code changes took effect July 1. Residential permits rose 102 percent in the Northeast back then, while falling everywhere else.

Though Crowe read the December increase as a "positive sign," Newport cautioned that the Census Bureau's methodology made reading too much into a single month's numbers risky.

"A three-month moving average shows new-home sales still stuck at the bottom, with sales starting to pick up in the West, flat in the South, but declining in the Northeast and Midwest," he said.

December sales were still 7.6 percent below the same month in 2009. Just 321,000 new homes sold in 2010, 14.2 percent below '09 levels, the Commerce Department said.

Fewer new homes were sold last year than in any year since data collection began in 1963. Sales in all four regions also set record lows.

Although the home buyers' tax credit boosted sales in the first quarter, they slipped over the next three.

Inventory is down to 6.9 months, the lowest since 1968, and builders have begun to worry about being unable to meet demand when the market recovers.

Data from the National Association of Realtors show the United States needs to build 1.3 million to 1.7 million housing units annually to keep pace with yearly household formations averaging 1 million to 1.4 million, in addition to replacing the 300,000 obsolete dwellings that are razed each year.

Statistics published in March by Freddie Mac, however, showed that only 910,000 units were started in 2008 and 550,000 in 2009.

The West and South continue to be the nation's primary new-home markets, and they have been the ones hardest hit by foreclosures, which, because of lower prices, pose stiff competition for builders.

Lenders also have been tight with credit for new projects, especially in high-volume foreclosure areas.

In a year-end report on metropolitan areas released Thursday, RealtyTrac of Irvine, Calif., said that though foreclosure activity had declined in the hardest-hit housing markets, levels remained five to 10 times higher than historic norms.

The top 19 markets for foreclosures were, as has been the case since 2007, cities in California, Nevada, Arizona, and Florida. The report noted foreclosure filings were rising in Houston, Seattle, and Atlanta.

Philadelphia was the 110th on the metro-area list.

The number of repossessed homes in the region has risen, but new foreclosures have probably peaked, said Mark Zandi, chief economist of Moody's Analytics in West Chester.

"The bad news is that with so much in inventory, distressed-home sales will remain very high this year into next, which will have an effect on house prices in the metro area," he said.

Once this bulge of distressed sales is passed, prices here will begin to rise consistently, Zandi said.

Foreclosure Trends in Phila.

Data are for the eight-county Philadelphia area, plus New Castle County, Del.

                Total           New

Month            homes       foreclosures

 Dec. '09         26,924      3,775

Jan. '10         26,644      3,430

Feb.             27,361      2,290

March          27,935      3,713

April             28,223      3,545

May             28,691      3,993

June             29,398      3,881

July             29,780      3,443

Aug.             29,427      4,383

Sept.          29,169      4,037

Oct.             33,748      3,925

Nov.             34,641      3,880

Dec.             35,652      3,370

SOURCES: RealtyTrac, Moody's Analytics


Contact real estate writer Alan J. Heavens at 215-854-2472,, or Twitter: @alheavens.