U.S. home sales fell in January, but the constraint from tight supply could ease as building permits and the number of homes under construction sit at levels last seen nearly 13 years ago.
The National Association of Realtors said on Friday existing home sales declined 1.3% to a seasonally adjusted annual rate of 5.46 million units last month. December's sales pace was revised down to 5.53 million units from the previously reported 5.54 million units.
Economists polled by Reuters had forecast existing home sales falling 1.8% to a rate of 5.43 million units in January. Last month, existing home sales were unchanged in the Northeast and rose in the Midwest and the populous South. But sales tumbled in the West, the country's most expensive region.
Existing home sales, which make up about 90% of U.S. home sales, surged 9.6% on a year-on-year basis in January.
The government reported on Wednesday that permits for future home construction jumped 9.2% in January to the highest level since March 2007. The inventory of homes under construction in January was the highest since February 2007.
The housing market is being boosted by the lowest mortgage rates in more than three years and could help to keep the economic expansion, now in its 11th year, on course, amid risks from the coronavirus, slowing consumer spending and weak business investment. The Federal Reserve cut interest rates three times last year and is expected to keep monetary policy unchanged at least through 2020.
There were 1.42 million previously owned homes on the market in January, down 10.7% from a year ago. The median existing house price increased 6.8% from a year ago to $266,300 in January.
At January's sales pace, it would take 3.1 months to exhaust the current inventory, up from 3.0 months in December and down from 3.8 months from a year ago. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.