The sales of existing homes in the United States dropped sharply in January to the lowest level in nine months after getting hit by the shortage of properties on the market.
The poor existing home sales report could devastate the expectations for an accelerated growth in the housing activity in the country this year.
The report of National Association of Realtors, which was released on Monday, showed the existing home sales tumbled 4.9 percent to an annual rate of 4.82 million units. The figure recorded for January is the lowest level since April 2014.
The sales pace of December was revised up to 5.07 million units from the earlier reported 5.04 million units. However, the revisions to sales data moving back to 2012 were minimal. Last month, the sales dropped despite a slump in mortgage rates that witnessed the 30-year rate hitting a low of 20 months.
The tighter inventories are severely affecting the sales by restricting the selection of houses that are available in the market for the potential buyers. Moreover, the dearth of supply has also kept the house prices elevated, extending a helping hand to sideline the first-time buyers from the housing market.
Several economists had made forecast that the existing home sales in the United States would drop only to a 4.97-million unit pace in January. The sales gained 3.2 percent from a year ago.
In January, the inventory of homes on the market that were not sold dropped 0.5 percent to 1.87 million from last year.
According to the economists, the inadequate equity and the uncertainty about the strengths of the American economy were the major drivers that have forced the potential sellers to stay in their homes.