Sales of previously owned homes fell to the slowest pace in more than three years, falling short of estimates and indicating that the housing market remained in a slowdown as the year ended.
Contract closings decreased 6.4% from the prior month to an annual rate of 4.99 million in December, the National Association of Realtors said Tuesday. The median sales price rose 2.9% from a year earlier, the least since February 2012, to $253,600, while inventory increased.
The latest results brought the 2018 tally to 5.34 million, the weakest pace since 2015. Analysts expect economic growth last quarter got little help from the industry. The report indicates the residential real estate industry remained in a broad slowdown brought on by elevated property values and a lack of affordable listings, though more inventory has become available compared with past years.
While home-price growth is cooling, it is still outpacing gains in worker pay. That’s kept buying out of reach for many Americans, especially young people who are also saddled with student loans. Nonetheless, a tight labor market is underpinning demand.
The NAR report is likely to be more closely monitored than usual as the government shutdown has delayed the release of key official data such as on housing and residential construction. “Affordability is more important than jobs,” NAR Chief Economist Lawrence Yun said at a briefing in Washington, referring to the softer results despite the strong labor market.
Home purchases fell in all four regions, led by an 11.2% decline in the Midwest and a 6.8% drop in the Northeast. Economists surveyed by Bloomberg had projected a 1.5% decline in sales to a 5.24 million pace. At the current pace, it would take 3.7 months to sell all homes on the market, compared with 3.9 months in November; Realtors see less than five months of supply as a sign of a tight market.
Existing-home sales account for about 90% of U.S. housing and are calculated when a contract closes. New-home sales make up the remainder of the market and are seen as timelier, because they’re counted when contracts are signed.