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Existing Home Sales Fall in December, Softening Best Year Since 2006

Image: Existing Home Sales Fall in December, Softening Best Year Since 2006

This Thursday, Dec. 3, 2015, file photo shows an existing home for sale in Roswell, Ga. (AP Photo/John Bazemore, File)

By    |   Wednesday, 25 Jan 2017 11:49 AM

Existing home sales fell 2.8 percent in December as supply dropped to the lowest level since 1999, according to the National Association of Realtors.

Sales of existing homes finished 2016 at 5.45 million units, the highest since 2006, which saw 6.48 million existing home sales, and above 2015's 5.25 million sales, NAR said in a news release. In December, the seasonally adjusted annual rate was 5.49 million, down from 5.65 million in November.

"Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market," Lawrence Yun, the National Association of Realtors chief economist, said in the release.

"However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December. While a lack of listings and fast rising home prices was a headwind all year, the surge in rates since early November ultimately caught some prospective buyers off guard and dimmed their appetite or ability to buy a home as 2016 came to an end."

The supply of existing homes for sale was 1.65 million at the end of December, the lowest since 1999, when NAR began tracking supply.

The median existing-home price for all housing types in December was $232,200, up 4 percent from December 2015 ($223,200). December's price increase marks the 58th consecutive month of year-over-year gains.

The housing news comes as the real estate industry complained about one of President Donald Trump's first actions, signing an order allowing the U.S. Department of Housing and Urban Development to suspend indefinitely a planned cut in the annual mortgage insurance premium on home loans insured by the Federal Housing Administration, the San Francisco Chronicle noted.

The move stopped a cut the outgoing Obama administration announced on Jan. 6, which would have reduced the annual insurance premium on most new FHA mortgages from 0.85 percent to 0.6 percent, the San Francisco Chronicle wrote.

The cut would have saved a homeowner with a $500,000 mortgage $1,250 per year.

While real estate groups urged Trump to reinstate the cuts, Ed Pinto, with the American Enterprise Institute, argued that stopping the cut was "actually good news for first-time buyers," the Chronicle reported.

Pinto said, according to the Chronicle, that when mortgage insurance premiums are cut in a seller's market with little inventory, it increases demand for FHA loans and increases home prices, making homes less affordable for FHA borrowers.

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Existing home sales fell 2.8 percent in December as supply dropped to the lowest level since 1999, according to the National Association of Realtors.
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