November was the year's busiest month - determined by the number of properties sold.
The median price was down due to a lot of cheaper properties selling in the later months of the year, with investors selling out where they had over-committed themselves, he said.
"A lot raced in and bought two or three houses and then some were vacant for a while, and some needed maintenance and they just became over-committed and so the decision was made for them to sell one or two of them."
Mr McDowell said he was "quietly confident" the market was now tracking in the right direction.
"We've had a flat market for a good long time but houses in the $300,000 to $450,00 price range are selling well."
Real Estate Institute of New Zealand (REINZ) chief executive Helen O'Sullivan said Rotorua's sales volumes picked up towards the end of 2012, however, prices had remained steady.
The national real estate market closed last year with a new median house price record of $389,000, up 9.6 per cent on December 2011.
A total of 74,000 houses sold during 2012, a 21 per cent increase on the previous year and the highest annual total since 2007.
Ms O'Sullivan said Auckland and Christchurch notched up strong growth and the real estate market posted big gains nationwide last year, particularly with the number of sales by auction.
"That's probably reflective of broader trends in the property market.
"Auckland and Christchurch are the two markets where supply is tightest so it's more of a sellers' market and obviously auctions suit a sellers' market better than [they do] a more balanced market or, a buyers' market."
The total number of auctions reached 11,950 last year, or 16.1 per cent of all sales, compared to 7101 auctions or 11.6 per cent of all sales during 2011.
January was traditionally one of the quieter months in real estate as realtors ended up with half a month's trading due to the holiday season.
Ms O'Sullivan said she expected to see "more of the same" this year, with the median sale price continuing to tick up steadily in most regions.
"I do expect to see volumes continue to increase."
Rotorua by the numbers:
$235,000 - median sale price for 2012
974 properties sold
Three properties sold over $1m
Month of highest median sale price: July
Month of lowest median sale price: November
Quietest month: January
Busiest month: November
-Source: REINZ
