US home sales had a big drop last month after three months of increases. The numbers registered from last month were actually last seen 18 years ago, when the housing market also had a big drop. According to The National Association of Realtors, the home sales decreased 2.8 percent.
There are various reasons as to why there was a drop in home sales last month, including the low number of properties available and the increasing prices. The 2.8 percent drop comes after three months of increases and experts believe this is not a sign that the drops will continue for 2017. In November, sales were at 5.65 million units, which was the highest in nine years. More than 30 percent of the buyers last month were first-time buyers.
Experts had actually predicted a drop last month but not as high. They had predicted a 1.1 percent drop but it ended up being a lot more at 2.8 percent. Their forecast meant 5.52 million units but the numbers were 5.49 million units. The drop in December does come after sales increased almost 4 percent for 2016. The 3.8 percent increase meant 5.45 million units for the year. This number was actually the highest in the last ten years. Joel Naroff, president and founder of Naroff Economic Advisors, says it is more of a sign that there are less homes to be bought. He also said it is difficult to sell homes that are not for sale.
The US home sales drop could mean an increase on home construction from some of the biggest companies in the country. Home building is said to be at around a 1.2 million unit rate and experts say the country needs between 1.5 and 1.6 million to lower the shortage of homes.
Home prices in the US continued to increase last month, with the median home price now at $232,000. From December 2015 to 2016, there was a four percent increase. The numbers for December come just days after a report revealed the most expensive cities in the world, where the median home price is nearly a million and sometimes even more. San Jose, Los Angeles and Honolulu were some of the cities mentioned in the top ten for least affordable cities in the world.
The recent drop in home sales comes after a three month increase, so experts aren’t too concerned about the latest numbers. The Realtors group is forecasting a small increase of one percent on home sales for 2017.