WASHINGTON - Sales of U.S. existing homes unexpectedly dropped in December as the lowest supply in more than a decade cut into the industry’s best year since 2007.
Purchases fell 1 percent to a 4.94 million annual rate last month, figures from the National Association of Realtors showed today in Washington. The reading was still the second-highest since November 2009. The median forecast of 79 economists surveyed by Bloomberg called an increase to a 5.1 million rate.
Even with December’s setback, 4.65 million homes were sold for all of 2012, the most in five years and a sign the housing market is taking steps toward recovery. The usual drop in supply at this time of year combined with a pickup in demand spurred by historically low mortgage rates, an improving job market and an increasing number of households risks keeping inventories lean, pushing prices up even higher after last year’s rebound.
“This isn’t worrisome at all,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected a drop to a 4.95 million annual rate. “For the first time in a while, it looks like it’s a sellers’ market as much as it’s a buyers’ market. I suspect prices and sales will go up again in 2013.”
Stocks fell, after benchmark indexes climbed to five-year highs last week, on the housing data and as investors weighed corporate earnings reports. The Standard & Poor’s 500 Index fell less than 0.1 percent to 1,484.75 at 11:21 a.m. in New York.
Another report today from Federal Reserve Bank of Richmond showed its manufacturing index fell to minus 12, the lowest level since July, from 5 in December. Readings less than zero signal contraction.
Existing home sales estimates in the Bloomberg survey ranged from 4.89 million to 5.25 million. The prior month’s pace was revised to 4.99 million from a previously reported 5.04 million.
Sales last year climbed 9.2 percent from 4.26 million in 2011.
The median price of an existing home rose to $180,800 last month, up 11.5 percent from $162,200 in December 2011. It was the biggest year-over-year gain since November 2005.
Another measure of prices, the S&P/Case-Shiller index of homes in 20 cities, most recently showed home values increased 4.3 percent in October from a year earlier, the biggest gain since May 2010. The gauge is up almost 9 percent since reaching a 10-year low in March.
The number of previously owned homes on the market dropped to 1.82 million, the fewest since January 2001, according to today’s report. At the current sales pace, it would take 4.4 months to sell those houses, the lowest since May 2005, compared with 4.8 months at the end of November.