The National Association of Realtors said on Tuesday that home sales declined in December to an annual rate of 4.94 million. That rate was down from 4.99 million in November, which was revised lower but was still the highest in three years.

Total home sales last year increased to 4.65 million. That is 9.2 percent higher than 2011 and the most since 2007. Sales finished below the roughly 5.5 million that is consistent with a healthy market. Still, most economists say that home sales are improving steadily and that the gains should continue this year.

Stable hiring, record-low mortgage rates and a tight supply of homes available for sale have helped increase sales and prices in most markets.

”We remain convinced that the housing recovery is well under way and should continue through 2013,” said Dan Greenhaus, chief global strategist at BTIG, an institutional brokerage.

The market is being held back by the shrinking supply of homes for sale. The inventory of available homes on the market dropped to 1.82 million in December, the lowest in 12 years.

And first-time buyers, who are critical to a housing recovery, made up only 30 percent of sales in December. That is down slightly from a year ago and well below the 40 percent that is typical in a healthy market.

Since the housing bubble collapsed six years ago, banks have tightened credit standards and are requiring larger down payments. Many would-be buyers are unable to qualify for the lowest mortgage rates on record.

The rate on the 30-year fixed mortgage averaged 3.66 percent in 2012, the lowest annual average in 65 years, according to Freddie Mac.

Sales are rising faster for more expensive homes, the Realtors group said. Sales of homes priced $1 million or more surged 62 percent in 2012, while sales of homes below $100,000 fell 17 percent.

Home prices rose 7.4 percent on an annual rate in November, the real estate data provider CoreLogic reported. That is the biggest annual increase since 2006, when the housing bubble burst. CoreLogic forecasts that home prices will rise 6 percent nationally this year.

Article source: http://www.nytimes.com/2013/01/23/business/economy/existing-home-sales-decline.html?partner=rss&emc=rss