U.S. existing home sales slip unexpectedly in December

But the small dip likely reflects tight supply

(Jonathan Ernst/Reuters)

To recap:

  • Sales of U.S. existing homes declined one per cent to a seasonally adjusted annual rate of 4.94 million in December, the National Association of Realtors said today. That was lower than the consensus expectation of a 5.1 million rate.
  • Although disappointing, the reading was still 12.8 per cent above the December 2011 rate.
  • Sales activity might have been hampered by a supply bottleneck: the stock of houses available for sale was the lowest since May 2005.
  • Reflecting tight inventories, the median price of a U.S. home was $180,800 in December, up 11.5 per cent from the same month last year.
  • Foreclosed and other distressed homes made up 24 per cent of sales, up from 22 per cent in November but down from 32 per cent in December 2011.
  • Single-family homes sales dipped 1.4 percent, while condominiums and co-ops purchases rose 1.7 percent.
  • Most of the decline happened in the South, where home purchases were down three per cent last month.

What the analysts are saying:

  • The weaker-than-expected reading is no cause for concern, according to RBC’s Nathan Janzen. Despite the December disappointment, average sales in the last three months of the year were 21.6 per cent above third-quarter levels on an annual basis.
  • TD’s Thomas Feltmate concurred, noting that, for the year as a whole, home sales grew 8.9 per cent in 2012 compared to a meagre 2.4 per cent increase in 2011. With mortgage rates at rock-bottom and the labour market showing signs of life, residential real estate sales should support consumer spending (think furnishing and renovations) and construction activity through the year.


Looking for more?

Get the Best of Maclean's sent straight to your inbox. Sign up for news, commentary and analysis.