Existing home sales in the US booked a weaker-than-expected December but saw their strongest year since 2006.
Sales decreased by 2.8% at a seasonally adjusted annual rate of 5.49 million in December, according to the National Association of Realtors.
Economists had forecast that sales fell by 1.1% at an annualized rate of 5.52 million, according to data from Investing.com.
Most homes that are bought and sold in the US are not brand new, making this the most active segment of the market.
“After beating expectations in September, October and November, reality finally caught up with existing homes sales in December,” Svenja Gudell, Zillow chief economist, said following the release of the report. “This monthly drop cancelled out any momentum sales had picked up – making the annual gain just shy of 1%.”
Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, finished 2016 at the highest level since 2006 (6.48 million), surpassing 2015’s 5.25 million.
“Housing affordability for both buying and renting remains a pressing concern because of another year of insufficient home construction,” Lawrence Yun, NAR chief economist, wrote in the report.
“Constrained inventory in many areas and climbing rents, home prices and mortgage rates means it’s not getting any easier to be a first-time buyer,” he continued. “It’ll take more entry-level supply, continued job gains and even stronger wage growth for first-timers to make up a greater share of the market.”
“Overall, weaker sales are not driven by wavering demand, another indicator that the reversal of the FHA premium cuts would have done little to bolster homeownership. At this point, lackluster inventory remains the number one driver of sales and prices,” Gudell added.