December proved to be anything but typical for agents and brokers as home sales dropped more than anticipated amid an ever-tightening supply of homes on the market, leading to rising prices.
That trend likely moved some first-time buyers to the sidelines.
The National Association of REALTORS® reported last week that existing home sales declined 3.6 percent to a seasonally adjusted annual rate of 5.57 million units in December, dropping in all four regions.
According to NAR, the November sales pace was revised down to 5.78 million units, still the highest level since February 2007.
In a CNBC report, economists polled by Reuters had forecast home sales falling 2.2 percent to a 5.70 million-unit rate in December from a previously reported 5.81 million-unit pace in November.
NAR also reported that existing home sales, which account for about 90 percent of U.S. home sales, rose 1.1 percent in December on a year-on-year basis. They increased 1.1 percent to 5.51 million units in 2017, the highest level since 2006.
Another statistic worth noting for agents and brokers is the number of previously owned homes on the market, which fell 11.4 percent to 1.48 million units in December, the lowest since January 1999 when the NAR started tracking the series. Housing inventory was down 10.3. percent from a year ago. It has declined for 31 straight months on a year-on-year basis.
At the sales pace set in December, it would take a record low 3.2 months to exhaust the current inventory, down from 3.5 months in November. A six-month supply is viewed as a healthy balance between supply and demand.
For agents and brokers, 2018 promises to be an interesting year as economists anticipate supply to remain tight this year, which paired with rising mortgage rates could result in modest home sales growth in 2018.
“We expect little growth in sales in 2018, given tight inventories,” said Gregory Daco, chief U.S. economist at Oxford Economics in New York. “Affordability will be crimped by rising mortgage rates, posing an additional headwind to sales.”
