Sales of previously occupied homes climbed in December but on the year there were fewer purchases for the first time since 2010.
Existing home sales rose 2.4 percent to 5.04 million on an annualized basis last month from a revised 4.92 million in November, reported the National Association of Realtors today in Washington, D.C. Economists had predicted a 3.0 percent gain to 5.08 million dwellings.
Purchases for the entire year however were off 3.1 percent at 4.93 million, down from 5.09 million in 2013. It was the first year since the market reached a trough at 3.45 million annual units in July of 2010 that the twelve month figures have not increased. Over the past 15 years sales have average 5.28 million per year.
The median price of a home rose 6 percent December to $209,500 from the same month in 2013. It was the highest price in seven years.
First time purchasers, who normally buy at the more inexpensive end of the markets, slipped to 29 percent of total purchases, the lovest level in almost 30 years, and down from 31 percent in November, according the Association. For the year firt time buyers made up 33 percent of new owners, the smallest numbr since 1987.
Despite the steady accretion of jobs this year, non-farm payrolls have averaged almost 250,000 a month, the best in fifteen years, and mortgage rates near historical lows, first time home ownership has gone into reverse. A probable culprit is the lack of wage growth combined with the steadily rising home prices.
Average hourly earnings were 1.7 percent higher on the year in December, just canceling the overall inflation rate. Since the end of the recession in June 2009 the annual increase in wages has been 2.0 percent, barely ahead of the 1.8 percent annual inflation rates.
The Federal Reserve may prefer measuring the core rate of inflation, leaving out food and energy costs, but families deciding on their largest purchase are unlikely to view inflation with such statistical dispassion.
The Case-Shiller gauge of home prices was 4.5 prcent higher on the year in October, but since January 2012 price increases have averaged 7.14 percent annually, makeing it difficult for new buyers to enter the market, even as they may be feeling more optimistic about their own financial situation.
The inventory of homes on the market dropped to 1.85 million in December from 2.08 million the prior month to the second lowest total since January 2001.
Investors comprised 17 percent of all buyers in December, down 4 percent on the year.
The national average on a 30-year fixed rate mortgage was 3.84 percent yesterday, according to Bankrate.com, down from a high of 4.53 percent last April and 4.20 percent as recently as two months ago. The all-time low for this most common home loan was 3.36 percent in December 2012.
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Existing Home Sales
Case-Shiller Home Prices vs. Average Hourly Earning (y/y)