WASHINGTON – Sales of existing U.S. homes dropped 5.7 percent in December to a 6.6 million unit rate, marking the third consecutive decline and hitting the lowest level since March 2004, according to trade group data Wednesday that pointed to further slowing in housing.
But for the year, 7.072 million homes were sold, making 2005 the fifth annual record in a row and the best year in U.S. housing, the National Association of Realtors said.
December's sales rate compared with an upwardly revised 7.0 million unit pace in November. The existing home figure includes both single-family homes and condos.
Analysts had expected overall sales to decline to a 6.90 million unit annual rate in December from an originally reported 6.97 million unit rate.
The decline in total sales was driven by a 6.8 percent drop in single-family home sales. Condo sales rose 1.6 percent in December.
Inventories declined in December by 4.4 percent to 2.796 million existing homes available for sale. That equates to 5.1 months' supply at the current sales pace.
December's drop in existing home sales signaled further cooling in the U.S. housing market after five years of gains that shattered construction and sales records and sent prices up more than 50 percent nationwide.
David Lereah, the Realtors' chief economist, said housing was cooling due to a rise in mortgage rates over 2005 and high prices in hot markets.
But he also noted that some of the slowing was happening in markets that never experienced a housing boom, such as Detroit and Columbus, Ohio, and other markets in the U.S. Midwest. He said job losses and slowing local economies were hurting housing there.
Nationwide, prices in 2005 rose 12.7 percent, but as the market cools and mortgage rates rise, price appreciation should slow to around 6 percent in 2006, Lereah said.
Price gains have already begun to ease, the Realtors group said, noting price appreciation hit 16.6 percent in October and then slowed to 13 percent in November and 10.5 percent in December.
The national median sales price in December was $211,000, the group said.