U.S. 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.
The National Association of Realtors said on Tuesday existing home sales declined 6.4 percent to a seasonally adjusted annual rate of 4.99 million units last month. That was the lowest level since November 2015.
November’s sales pace was revised slightly up to 5.33 million unit from the previously reported 5.32 million units.
Economists polled by Reuters had forecast existing home sales falling 1.0 percent to a rate of 5.25 million units in December.
Existing home sales, which make up about 90 percent of U.S. home sales, plunged 10.3 percent from a year ago. For all of 2018, sales fell 3.1 percent to 5.34 million units, the weakest since 2015.
The housing market has been stymied by higher mortgage rates as well as land and labor 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 a four-month low, with much of the moderation occurring in the second half of December, and house price inflation is slowing.
A survey last week showed a rebound in homebuilders confidence in January amid optimism over market conditions now and over the next six months, as well buyer traffic.
Homebuilders are hopeful that the moderation in mortgage rates “will help the housing market continue to grow at a modest clip as we enter the new year.”
A month-long partial shutdown of the federal government, which has delayed data on new home sales, housing starts and building permits is, however, making it difficult to get a good read of the housing market. 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. A six-to-seven-months supply is viewed as a healthy balance between supply and demand.
The median existing house price increased 2.9 percent from a year ago to $253,600 in December. That was the smallest increase since February 2012.