US sales of existing homes slumped in January, falling for the second straight month and posting the largest decline in three years amid a shortage of affordable options, according to industry figures released Wednesday.
The National Association of Realtors said a stifling lack of homes on the market was driving up prices and holding down sales.
Total sales of existing homes, which includes single-family houses, townhouses, condos and co-ops, fell 3.2 percent from the prior month to an annual rate of 5.4 million, seasonally adjusted, well below analyst expectations for a rate of 5.6 million.
The continued decline came despite a downward revision to December and put sales 4.8 percent below January 2017, the largest year-on-year drop in more than three years, NAR said in its monthly report.
NAR chief economist Lawrence Yun blamed falling sales on an ‘utter lack of sufficient housing supply’ even though buyer traffic was even stronger than it was at the start of 2017.
‘It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth,’ he said in a statement.
The median home price jumped 5.8 percent to $240,500 from a year earlier – the 71st consecutive increase.
 Winter storms, mortgage ratesThe inventory of homes on the market rose 4.1 percent from December to 1.52 million, but that was 9.5 percent below year-ago levels. The year-over-year measure has fallen 32 months, according to NAR.
In addition to the rising prices, the average interest rate for 30-year mortgages rose for the fourth straight month and is expected to continue rising in 2017 as monetary policymakers respond to inflation.
Analysts say the housing market is exceedingly tight, with a decade of economic recovery and a recent uptick in wages producing strong demand, that coupled with scarce labor in construction and rising input costs, is holding back the pace of construction.
Over the objections of the real estate industry, December’s sweeping tax cuts also limited deductions for state and local property taxes, making home ownership significantly more expensive in states that charge higher property taxes.
But Ian Shepherdson of Pantheon Macroeconomics said rising mortgage rates did not explain January’s slump in sales, given that sales generally lag changes in interest rates.
Instead, ‘the severe cold spell across much of the country in the first week of the month likely is part of the explanation,’ he said in a research note.
‘We expect a clear rebound in sales over the next few months, but the outlook for the second half (of the year) is more cloudy.’