Sales of previously owned homes in the US unexpectedly fell by the most in nearly two years, sliding for the second consecutive month.

Existing home sales — which include completed transactions on single-family homes, town houses, condominiums and co-ops — fell 3.2 per cent in January from the previous month to an annualised pace of 5.38m, the National Association of Realtors said on Wednesday. That was the steepest one-month drop since February 2016, according to Thomson Reuters data.

Economists had forecast an 0.9 per cent increase to an annualised pace of 5.6m During the previous month they fell a revised 2.8 per cent.

“The utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the US last month,” said Lawrence Yun, chief economist at NAR.

Indeed, the report showed that the median price for all housing types was up 5.8 per cent from a year ago to $240,500 and that the stock of homes for sales was 9.5 per cent lower than a year ago.

“While the good news is that realtors in most areas are saying buyer traffic is even stronger than the beginning of last year, sales failed to follow course and far lagged behind last January’s pace,” Mr Yun said. “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.”

While a robust labour market and firming wages have supported the housing market, there are still some concerns that the recent uptick in mortgage rates could offset income growth.

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