A three-year winning streak for sales of previously owned homes in the U.S. ended in 2014 as some investors stepped out of the market and first-time buyers failed to fill the void.
Purchases totaled 4.93 million last year, down 3.1 percent from the 5.09 million houses sold in 2013, figures from the National Association of Realtors showed Friday in Washington.
The share of American homebuyers making their first purchase dropped in 2014 to its lowest level in almost three decades, according to the Realtors group. At the same time, employment gains, growing consumer confidence, mortgage rates at historically low levels and government efforts to lower purchasing costs probably will help bolster demand in 2015.
“Demand has been pretty sideways,” said Jay Feldman, an economist at Credit Suisse in New York. “There are various positives and I don’t see any big negatives for housing. The improving labor market and low mortgage rates will support the housing recovery.”
Purchases climbed a less-than-forecast 2.4 percent in December from the prior month to a 5.04 million annual rate, the report showed.
The median forecast of 76 economists in a Bloomberg survey called for sales of previously owned homes to rise to a 5.08 million pace in December. Estimates ranged from 4.93 million to 5.25 million. The November reading was revised down to 4.92 million from a previously reported 4.93 million.
First-time buyers accounted for 29 percent of all purchases in December, down from 31 percent a month earlier, the report showed. A separate survey from the group showed they made up 33 percent for all of 2014, the fewest since 1987.
“First-time buyers are still missing in action,” Lawrence Yun, NAR chief economist, said at a news conference today as the figures were released. The market in 2014 was “mildly disappointing.”
Falling interest rates, more jobs and higher levels of confidence indicate “pent-up demand continues to build,” he said. “2015 should be a better year.”
A lack of supply and rising prices are probably among reasons younger and first-time buyers have yet to enter the market. Those issues are also driving out investors, who led the early stages of the recovery.
The median price of an existing home advanced 6 percent in December from the same period a year earlier, to $209,500, the Realtors’ report showed. In 2014, it was the highest in seven years.
The number of previously owned homes on the market fell to 1.85 million, the second-smallest reading for any December since 1999.