U.S. home sales unexpectedly fell in January, leading to the biggest year-on-year decline in more than three years, as a persistent shortage of houses pushed up prices and kept first-time buyers out of the market.
The National Association of Realtors said on Wednesday that existing home sales dropped 3.2 percent to a seasonally adjusted annual rate of 5.38 million units last month. It was the second straight monthly decline and reflected decreases in all four regions.
Economists polled by Reuters had forecast existing home sales rising 0.9 percent to a rate of 5.60 million units in January.
Existing home sales, which account for about 90 percent of U.S. home sales, declined 4.8 percent on a year-on-year basis in January. That was the biggest year-on-year drop since August 2014. The weakness in home sales is largely a function of supply constraints rather than a lack of demand.
House price increases have outstripped wage growth, which has remained stuck below 3 percent on an annual basis despite the unemployment rate being at a 17-year low of 4.1 percent.
While the number of previously-owned homes on the market rose 4.1 percent to 1.52 million units in January, housing inventory was down 9.5 percent from a year ago. That was the lowest inventory for January on record. Supply has declined for 32 straight months on a year-on-year basis.
At January’s sales pace, it would take 3.4 months to exhaust the current inventory, up from 3.2 months in December. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.
The median house price increased 5.8 percent from a year ago to $240,500 in January. That was the 71st consecutive month of year-on-year price gains.