Sales of U.S. existing homes unexpectedly dropped in December, restrained by the lowest supply of properties in more than a decade.
Purchases fell 1% 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 for sales to increase to a 5.1 million rate.
Even with December’s slip, 4.65 million homes were purchased for all of 2012, the most since 2007 and a sign the housing market is making steps toward recovery. Historically low mortgage rates, an improving job market and an increasing number of households will probably spur demand for housing this year.
“The best news was that the situation was really improving and gaining speed at a time when the economy was pretty much struggling,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said before the report.
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% from 4.26 million in 2011.
The median price of an existing home rose 11.5% to $180,800 from $162,200 in December 2011.
Another measure of prices, the S&P/Case-Shiller index of homes in 20 cities, most recently showed home values increased 4.3% in October from a year earlier, the biggest gain since May 2010. The gauge is up almost 9% 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.
“The only concern going into 2013 is the inventory situation,” Lawrence Yun, NAR chief economist, said in a news conference today as the figures were released. “Price increases are almost guaranteed going into 2013.”
Record-low borrowing costs underpinned housing gains last year. The average rate on a 30-year, fixed mortgage was 3.38% last week, hovering near the 3.31% reached a month earlier that was the lowest in data going back to 1972, according to McLean, Virginia-based Freddie Mac.
Progress will probably build in 2013. Sales of existing homes will rise about 7.2% to 4.98 million this year, the highest since 2007, according to the median estimate of economists and housing analysts surveyed by Bloomberg. Prices will gain 3.3% after an estimated 4.5% jump in 2012, according to the forecasters.
“After seven years of navigating an unprecedented market downturn, we finally saw stabilization and recovery in 2012,” Stuart Miller, chief executive officer of Lennar Corp., the largest U.S. homebuilder by market value, said during a Jan. 15 earnings call. “While there have been and still are economic and political uncertainties ahead, we feel that this housing recovery is fundamentally based and driven by a long-term demographic need for housing. 2012, therefore, we believe is just the beginning of the recovery.”