Dive Brief:

• New single-family home sales dropped 10.4% from November’s upward-adjusted rate of 598,000 to a seasonally adjusted annual rate of 563,000, the Commerce Department reported Thursday. The rate is 0.4% below the year-ago estimate of 538,000.

• December’s figures came in below analyst expectations, with economists polled by MarketWatch calling for an annual rate of 595,000 sales.

• The median sales price of new homes sold in December was $322,500, up from $305,400 in November and $304,500 in October. The supply of new homes rose marginally to 5.8 months in December from 5.0 months in November.

Dive Insight:

December's weak report comes on the heels of a strong November performance, raising questions at to whether conditions on the supply side could be stalling growth.

While the housing market continues its uphill battle to self-regulate following the recession, the industry faces tight inventory, low lot availability and a dearth of skilled labor that could otherwise help to create new stock and relieve pressure from demand. A recent report from Zillow revealed that inventory levels were down at least 25% from highs posted since January 2010 across the top 35 U.S. markets and the country.

Existing-home sales also took a tumble in December, posting a rate below analyst predictions and signaling a possible slowdown in 2017. As with new-home sales, tight inventory, rising prices and mortgage rate hikes could be the perfect storm for a leveling off of demand in the market just as builders turn their attention to the rising group of first-time buyers seeking lower-priced properties in job-growth markets.

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