The number of homes on the market fell for the first time in 16 months in December, hinting at a potential acceleration in home prices in the months ahead.

That might be good news for sellers, but not for buyers who could get priced out of the market or the real estate agents who represent both sides in home sales.

“Months’ supply is already low at 4.4 months,” said National Association of Realtors Chief Economist Lawrence Yun in an analysis of the trend. “More inventories are needed, not less. Or else, home prices could reaccelerate.”

Inventory dropped only slightly in December — it was down 1 percent from a year ago, to 1,85 million homes — but the months’ supply of homes on the market was already low. Anything less than six months of supply is generally considered an indication that demand is outstripping supply.

Existing

Home prices gains accelerated at the tail end of 2014. Last spring and summer, the median price rose between 4 and 5 percent. From November to December, the price increased by 6 percent, Yun said.

Median

Part of the decrease in inventory could be due to shrinking foreclosure inventories. Realtors who specialize in distressed property sales “should be aware that there will be less business opportunity in this field going forward,” Yun said.

Foreclosure

The drop represents a reversal from the overall growth in listings that had been experienced through the rest of 2014.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Hear from Realogy, Pacaso, SERHANT., Spotify, Redfin, Douglas Elliman, and 100+ more leaders at ICNY.Register now×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription