US home sales tumbled to their lowest level in three years in December and house price increases slowed sharply, suggesting a further loss of momentum in the housing market.
November’s sales pace was revised slightly up to 5.33 million unit from the previously reported 5.32 million units, reports Reuters.
Economists polled by Reuters had forecast existing home sales falling 1.0 per cent to a rate of 5.25 million units in December.
Existing home sales, which make up about 90 per cent of US home sales, plunged 10.3 per cent from a year ago. For all of 2018, sales fell 3.1 per cent to 5.34 million units, the weakest since 2015.
The market has been stymied by higher mortgage rates as well as land and labour shortages, which have led to tight inventory and more expensive homes. But there are glimmers of hope for the sector.
The 30-year fixed mortgage rate has dropped to a four-month low, with much of the moderation occurring in the second half of December, and house price inflation is slowing.
The median existing house price increased 2.9 per cent from a year ago to $253,600 in December. That was the smallest increase since February 2012.
A survey last week showed a rebound in home-builders confidence in January amid optimism over market conditions now and over the next six months, as well buyer traffic.
Last month, existing home sales fell in all four regions.
There were 1.55 million previously owned homes on the market in December, down from 1.74 million in November, but up from 1.46 million a year ago.
At December’s sales pace, it would take 3.7 months to exhaust the current inventory, down from 3.9 in November and up from 3.2 a year ago.
A six-to-seven-months supply is viewed as a healthy balance between supply and demand.
Houses for sale typically stayed on the market for 46 days in December, up from 42 days in November and 40 days a year ago.
Thirty-nine per cent of homes sold in December were on the market for less than a month.
The share of first-time buyers fell to 32 per cent last month from 33 per cent in November. Economists and realtors say a 40 per cent share of first-time buyers is needed for a robust housing market.
Sales fell in all price segments of the market last month, with steep declines at the lower end, which accounts for a large portion of the housing market.