U.S. home resales rose slightly in December but fell overall for the year, the first annual drop since 2010 and another sign that the housing market recovery remains uneven amid expectations of a pick-up in 2015.
“The still-tight mortgage credit conditions and more challenging first-time homebuyer affordability that were revealed by the failure of home sales to continue recovering last year remain serious concerns as we head into 2015,” said Ted Wieseman, an economist at JPMorgan in New York.
First-time buyers made up 29 percent of transactions in December as well as for the year as a whole, well below the level needed to boost growth in the housing market.
For all of 2014, existing home sales fell 3.1 percent, the first annual drop in four years. The housing market has struggled to maintain momentum since stagnating in the second half of 2013 following a run-up in mortgage rates.
At December’s sales pace it would take 4.4 months to clear all available houses from the market, down from 5.1 months in November and the lowest since January 2013.
However, a decline in mortgage rates, an easing of lending standards and the resurgent health of the U.S. economy over the last few months has spurred optimism that sales could strengthen this year.
And the outlook for the economy remains upbeat. In a separate report the Conference Board said its Leading Economic Index rose 0.5 percent last month after a 0.4 percent increase in November.
December’s jump was driven by gains in most of the index’s components, suggesting the short-term outlook is getting brighter and the economy continues to build momentum, the Conference Board said.