Housing market activity fell across the board in December and existing home sales were no exception. Low inventory is still the biggest bottleneck to sales as strong economic conditions continue to hold up housing demand.
- Existing-home sales dropped 3.2% month-over-month to 5.57 million in December
- Median cost of homes grew 5.8% year-over-year to $246,800 in December
- Total housing inventory dropped 11.4% month-over-month to 1.48 million in December
Home sales were stifled by low housing inventory in the last month of 2017. Existing home sales dropped 3.2% month-over-month and new homes sales declined 9.3%. As a whole, 2017 was still a record-setting year with overall home sales rising to their highest levels since the housing crash.
“The pool of interested buyers at the end of the year significantly outweighed what was available for sale,” NAR Chief Economist Lawrence Yun said in a statement.
A lack of housing inventory has exacerbated high home prices. The inventory cannot keep up with rising demand either, which pushed the median existing-home price to $246,800, up 5.8% year-over-year in 2017.
“The inventory of homes on the market is at its lowest level in [at least] two decades,” says realtor.com® Senior Economist Joseph Kirchner. “It’s a problem because it means people are not finding homes on the market that meet their needs. So they’re just not buying.”
Regionally, the Midwest had the cheapest homes with a median existing home price of $191,400, up 7.8% year-over-year in December. The South had a median price of $221,200, up 5.8% year-over-year.
The Northeast and West carried the most expensive homes by far. The median home price in the Northeast was $261,400. The West had an incredibly inflated median of $367,400, up 7.3% from the year prior.
“Rising wages and the expanding economy should lay the foundation for 2018 being the turning point towards an uptick in sales to first-time buyers,” Yun said. “However, if inventory conditions fail to improve, higher mortgage rates and prices will further eat into affordability and prevent many renters from becoming homeowners.”