Sales of previously owned homes decreased in December 2017, as low inventory is limiting the choice of prospective buyers and keeping price growth elevated. Again, unseasonably cold weather also accounted for a bit of the downfall.

December Existing Home Sales Data

As revealed by the National Association of Realtors (NAR), existing-home sales slipped 3.6% in December to a seasonally adjusted annual rate of 5.57 million units from a downwardly revised 5.78 million in November after three straight months of strong increases. Nonetheless, existing home sales, which account for about 90% of U.S. home sales, grew 1.1% on a year-over-year basis during the month.

Also, December’s median sales price grew 5.8% from the comparable period a year ago to $246,800, marking the 70th straight month of year-over-year gains. For 2017, prices increased 5.8%, rising for the sixth straight year.

Again, inventory continues to slip, leaving less homes for future sales. The supply of existing homes decreased 11.4% from November and 10.3% from the year-ago period. It has fallen year over year for 31 consecutive months. As such, it will take only 3.2 months to deplete the current supply of homes in the market, according to NAR. This is also the lowest reading since the group began tracking the data in 1999.

An Impressive 2017 for Homebuilding

Although the December housing data were not impressive, the larger picture is overwhelming for 2017. Existing home sales concluded the year with 1.1% gain to 5.51 million units, the highest since 2006. Building permits increased 4.7% and housing starts increased 2.4% in 2017 from the 2016 figure. The industry advanced almost 69% in 2017, outperforming the broader market’s (S&P 500) growth of 19.7%.

Moreover, January 2018 builders’ confidence reading remained in the 70s, signaling that housing demand should continue to grow this year.

U.S. Housing Signaling a Positive 2018 Amid Odds

Although inventory constraints have been consistently pulling the housing market down, robust demand is keeping the industry alive. This is primarily because of solid labor market that is near full employment.