For the second consecutive month, existing US home sales were lower in January.
The 3.2% month-over-month drop meant a seasonally adjusted annual rate of 5.38 million from a downwardly revised 5.56 million in December, National Association of Realtors data shows.
Sales were 4.8% down from January 2017, the largest annual drop since August 2014 (5.5%) and were at the slowest pace since September 2017 (5.37 million).
"The utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the U.S. last month," said Lawrence Yun, NAR chief economist.
He added that supply needs to be added to ease affordability issues, especially as Realtors are reporting strong buyer traffic.
Prices rise as inventory tightens further
The median existing home price in January was $240,000, up 5.8% year-over-year. It was the 71st straight month of gains.
Inventory meanwhile was 1.52 million, 4.1% higher than in December but 9.5% down from January 2017. That’s 3.4 months of supply at the current pace, down from 3.6 months a year earlier.
"However, there's hope that the tide is finally turning,” added Yun. “There was a nice jump in new home construction in January and homebuilder confidence is high. These two factors will hopefully lay the foundation for the building industry to meaningfully ramp up production as this year progresses."
First-time buyers made up just 29% of all buyers, down from 32% in December and 33% in January 2017.
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