Sales of previously occupied homes dropped in December as the supply of available units declined to the lowest level in more than seven and a half years.
Existing home sales fell 1.0% to an annualized rate of 4.94 million according to the National Association of Realtors. An increase of 1.2% to a 5.10 pace had been predicted by economists in the Reuters poll. November's sales were revised down to 4.99 million from 5.04 million.
The inventory of homes for sale fell 8.5% to 1.82 million in December, the fewest on the market since January 2001. At the current selling pace that supply would take 4.4 month to clear, down from 4.8 months in November and the shortest time since May 2005.
Existing home sales tracks completed purchases of single family homes, townhomes, condominiums and co-ops. The preliminary 4.65 million total for 2012 was 9.2% higher than the 4.26 million in 2011 and the highest since 2007 when 5.03 million homes sold.
The median selling price was $180,800 in December, 11.5% higher than a year earlier. It was the tenth straight month of price gains and the strongest monthly rise since the 12.9% climb in November 2005.
Sales of distressed properties, foreclosures and short sales, made up 24% of the the December total equally split between the types, up from 22% in November but down from the 32% share in December 2011. Cash sales, often by investors buying for resale, were 29% of December purchases, 30% in November and 31% in December 2011.
Single family home sales were 88% of the turnover last month, 4.35 million out of the 4.94 million total. They are 11.5% higher than the 3.90 million pace in December 2011. The median selling price was $180,300 in December up 10.9% on the year.
Chief Market Strategist