Sales of previously owned U.S. homes declined in December, suggesting that fast-rising prices and tight inventory may be weighing on buyer demand heading into 2018.
Existing-home sales fell 3.6% in December from the prior month to a seasonally adjusted annual rate of 5.57 million, the National Association of Realtors said Wednesday. Economists surveyed by The Wall Street Journal had expected a 2.2% decline in sales from November.
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For 2017 as a whole, sales increased 1.1% to a 5.51 million pace, marking the best year for sales since 2006.
Home sales grew in November to the strongest pace in more than a decade, buoyed in part by solid economic growth. Economists said part of the sales gain could have been catch-up after sale closings were knocked off course by late-summer hurricanes.
A shortage of available houses on the market has driven up prices in many regions. There was a 3.2-month supply of homes on the market at the end of December, based on the current sales pace, which is the lowest level since NAR began tracking these data in 1999.
Edie Butler, a North Carolina-based realtor with Keller Williams, said the supply of homes available for sale in the Charlotte market started decreasing after peaking in October 2010 at more than 50,000. This month, there were 29,800 homes for sale.
"At this time last year we were in a seller's market," Ms. Butler said. "This year...we're in an even tighter seller's market."
While waiting to close on purchase of a new three-story town home in Charlotte, Mike Hendricks, senior vice president at bank F.N.B. Corporation, put his Greensboro home up for sale earlier this week.
"I'm taking a chance on the confidence that I can sell it relatively quickly and not have two house payments for too long," Mr. Hendricks said, noting he felt a sense of comfort due to the quick average selling time of 73 days in his neighborhood.
Several factors are converging to buttress home buying. The national unemployment rate in December was 4.1%, holding at a 17-year low. Gauges of household confidence remain elevated. Borrowing costs remain low by historical standards; the average interest rate on a 30-year fixed-rate mortgage in December was 3.95%, according to Freddie Mac.
Still, the limited inventory on the market is driving up home prices at a rapid pace, potentially blocking some would-be buyers.
The median sale price for an existing home in December was $246,800, up 5.8% from a year earlier.
Purchases of previously owned homes account for the bulk of U.S. home-buying activity. The Commerce Department will release data on December new-home sales Thursday, with economists surveyed by the Journal expecting sales decreased 7.2% last month.
News Corp., owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.
A copy of the full report is available at: http://www.census.gov/construction/nrs.
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(END) Dow Jones Newswires
January 24, 2018 10:15 ET (15:15 GMT)
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