December existing home sales dropped 2.9 percent from November and were up only 0.7 percent from a year ago, the first monthly declines after a string of monthly increase, according to the National Association of Realtors.
National sales rates were depressed by low inventory – the lowest on record during the 17 year recording history and unseasonably cold weather in December. Existing sales saw their biggest month-over-month drops in the Northeast and West, while sales were flat in the South. On a year-over-year basis sales were down in the West (-1.6%), however modestly up in the Midwest (+2.4%), Northeast (+2.7%) and the South (+0.45%).
November existing home prices fell by 1.5% from November to $236,400, which was the first monthly drop in median sales price since July 2016. On an annual basis, the median sales price still up 3.9%.
After beating expectations in September, October and November, reality finally caught up with existing homes sales in December. This monthly drop cancelled out any momentum sales had picked up – making the annual gain just shy of 1 percent. Nationally, sales were depressed by record low inventory levels and unseasonably cold weather in December. Rising mortgage rates had also pulled forward some demand in October and November as buyers tried to close quickly on sales, causing December sales to be weaker. 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 price increases.