December existing-home sales slide

Existing-home sales fell 3.6% in December to a seasonally adjusted rate of 5.57 million from a downwardly revised 5.78 million in November, the National Association of Realtors reported. But after last month’s fall-off, existing-home sales remain 1% above a year ago.

Total existing-home sales, which includes completed transactions that include single-family homes, townhomes, condominiums, and co-ops, increased in 2017 to a 5.51 million sales pace and surpassed 2016’s mark of 5.45 million sales as the highest since 2006 with 6.48 million sales.

“Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand,” said Lawrence Yun, NAR chief economist.

“At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country," Yun explained. "These two factors ultimately muted what should have been a stronger sales pace."

Affordability continues to be an issue for existing-home buyers with the pool of interested buyers at the end of month being outweighed by what was available for sale. First-time buyers were 32% of sales in December, which is up from 29% in November and unchanged from a year ago.

The median existing-home price for all housing types in December was $246,800, a 5.8% increase from December 2016 ($233,300). December’s price increase marks the 70th straight month of year-over-year gains.

Total housing inventory at the end of December dropped 11.4% to 1.48 million existing homes available for sale, and is 10.3% lower than the 1.65 million available last year. The total has fallen year-over-year for 31 consecutive months, the NAR reported. Unsold inventory is at a 3.2-month supply at the current sales pace, which is down from 3.6 months a year ago and is the lowest level since NAR began tracking in 1999.

Single-family home sales declined 2.6% to a seasonally adjusted annual rate of 4.96 million in December from 5.09 million in November, but are still 1% above the 4.91 million pace a year ago. The median existing single-family home price was $248,100 in December, up 5.8% from December 2016. Existing condominium and co-op sales fell 11.6% to a seasonally adjusted annual rate of 610,000 units in December.

In the Northeast, December existing-home sales fell 7.5% to an annual rate of 740,000, and are now 2.6% below a year ago. The median price in the Northeast was $261,400, a 3% percent hike from December 2016.

Existing-home sales in the Midwest dropped 6.3% to an annual rate of 1.33 million in December, but are 1.5% above a year ago. The median price in the Midwest was $191,400, up 7.8% from a year ago.

Existing-home sales in the South decreased 1.7% to an annual rate of 2.3 million in December, but are 3.1% above a year ago. The median price in the South was $221,200, up 5.8% from a year ago.

In the West, sales declined 1.6% to an annual rate of 1.2 million in December, and are now 0.8% below a year ago. The median price in the West was $367,400, up 7.3% from December 2016.

Despite strong U.S. economic conditions, a tight supply will continue to have a big impact on existing-home prices.

“The lack of supply over the past year has been eye-opening and is why, even with strong job creation pushing wages higher, home price gains — at 5.8% nationally in 2017 — doubled the pace of income growth and were even swifter in several markets,” Yun said.