U.S. home resales fell sharply to their lowest level in nine months in January amid a shortage of properties on the market, a setback that could temper expectations for an acceleration in housing activity this year. The National Association of Realtors said on Monday existing home sales declined 4.9 percent to an annual rate of 4.82 million units, the lowest level since last April.
“Existing home sales are taking a bumpy road towards recovery,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. The decline in sales, which was across all four regions, came despite the 30-year mortgage rate falling to a 20-month low. It was worse than economists’ expectations for a 4.97 million unit-pace.
Tight inventories are hurting sales by limiting the selection of houses available to potential buyers. The lack of supply is also keeping house prices elevated, helping to sideline first-time buyers from the market. There is hope a tightening labor market would spur sturdy wage growth and pull first-time buyers into the market. But unless there is a significant pickup in the number of homes available for sale, the housing recovery could remain sluggish.