Existing home sales continued to languish in December, down 3.5 percent from November and 36.6 percent from a year prior.

Resale inventory was down 6.6 percent for the month, following the typical seasonal pattern, but remained 16.9 percent above year-ago levels.

Putting the two figures together, there were about 12 months' worth of of resale inventory sitting on the market. This level of inventory, as the accompanying graph shows, is about the same as in recent months but is substantially worse than it was earlier in the year or for that matter at any time during the bust to date.

A rule of thumb I've heard many times, most recently on the always insightful Calculated Risk blog, is that 6 months of inventory is about normal and that anything above 8 months will put downward pressure on home prices. The rule doesn't address what happens at 12 months of inventory.

— RICH TOSCANO