Investing.com – U.S. existing home sales declined much more than expected in December, dampening optimism about the health of the housing market, according to a report released on Wednesday by the National Association of Realtors (NAR).
The industry data showed that home resales decreased by 3.6% in December to a seasonally adjusted 5.57 million units from 5.78 million units in the previous month which was revised down from an initial 5.81 million.
The consensus forecast was for a 2.2% decline to 5.72 million units in decline.
The data helps to gauge the strength of the U.S. housing market and is considered to be a key indicator of overall economic strength.
Despite the disappointing end to 2017, NAR highlighted that sales had still risen by 1.1% on an annualized basis and last year was the best year for sales in 11 years.
However, NAR chief economist Lawrence Yun noted that the details were “far from perfect” as new listing struggled to keep up with the quick pace of sales while buying became less affordable in a large portion of the U.S.
“These two factors ultimately muted what should have been a stronger sales pace,” he said.
The report also showed that the median existing-home price for all housing types in December was $246,800, up 5.8% from December 2016 ($233,300). December’s price increase marks the 70th straight month of year-over-year gains.
“Rising wages and the expanding economy should lay the foundation for 2018 being the turning point towards an uptick in sales to first-time buyers,” Yun commented.
“However, if inventory conditions fail to improve, higher mortgage rates and prices will further eat into affordability and prevent many renters from becoming homeowners,” he warned.
After the report, EUR/USD traded at 1.2398 compared to 1.2393 before the release, GBP/USD exchanged hands at 1.4214, compared to 1.4215 before the data, while USD/JPY traded at 109.20 compared to 109.21 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, traded at 89.07, compared to 89.08 earlier.
Meanwhile, U.S. stocks were trading higher after the open. The Dow 30 gained 178 points, or 0.68%, the S&P 500 rose 12 points, or 0.43%, while the tech-heavy Nasdaq Composite traded up 18 points, or 0.24%.
Elsewhere, in the commodities market, gold futures traded at $1,353.80 a troy ounce, compared to $1,354.90 ahead of the data, while U.S. crude oil changed hands at $64.61, compared to $64.62 earlier.