Existing-home sales finished out 2014 at a brisk pace, even as the stock of available homes fell.
The National Association of Realtors (NAR) said Friday that sales of pre-owned homes rose 2.4 percent month-over-month in December to a seasonally adjusted annual rate of 5.04 million. It was the sixth time in the past seven months in which existing-home sales topped an annual rate of 5 million.
The group estimates existing-home sales totaled 4.93 million for all of 2014, a 3.1 percent decline from the year prior. Much of that decline can be traced to the year's early months, when transactions came in sluggish.
"Home sales improved over the summer once inventory increased, prices moderated and economic growth accelerated," said NAR Chief Economist Lawrence Yun. "Sales were measurably better in the second half—up 8 percent compared to the first six months of the year."
One area that worsened in December was the supply of available homes for sale, which fell 11.1 percent to an estimated 1.85 million, NAR said. At the current sales pace, December's inventory would last about 4.4 months, well below the six-month balance NAR says is normal.
Yun says December's decline inventory "raises some affordability concerns" for the coming months, limiting buyers' options and pushing price appreciation further.
"Housing costs—both rents and home prices—continue to outpace wages and are burdensome for potential buyers trying to save for a downpayment while looking for available homes in their price range," he said.
The national median existing-home price in December was $209,500, NAR reported, an increase of 6 percent year-on-year.
Higher costs would be especially burdensome for would-be first-time homebuyers, who accounted for only 29 percent of December transactions, NAR said. A separate survey released last year showed that the annual share of first-time buyers was recently down to its lowest in nearly three decades. However, other reports put that figure at closer to 50 percent.
No matter the current number, NAR hopes to see first-time buyer share improve this year as lenders start to offer lower down payment options and the Federal Housing Administration (FHA) reduces annual insurance premiums.
"NAR is a strong support of the FHA and its vital role in the mortgage marketplace for homebuyers," said NAR President Chris Polychron. "Realtors support responsible lending to qualified borrowers and the move to lower premiums will enable more buyers to enter the market while continuing to protect taxpayers from the risky lending practices that led to the housing crash."
Existing-home sales improved in the country's more active housing regions, rising 3.8 percent to a rate of 2.17 million in the South and 9.8 percent to a rate of 1.12 million in the West.
The Northeast and Midwest weakened, meanwhile, posting monthly declines of 2.9 percent (to a rate of 660,000) and 3.5 percent (to a level of 1.09 million), respectively.