U.S. sales of previously occupied homes dipped in December from November, in part because of a limited supply of available homes. But for all of 2012, sales rose to their highest level in five years.
The National Association of Realtors said Tuesday that sales declined in December to an annual rate of 4.94 million. That's down from a rate of 4.99 million in November, which was revised lower but was still the highest in three years.
Total sales last year increased to 4.65 million. That's 9.2 percent higher than 2011 and the most since 2007. Sales finished below the roughly 5.5 million that are consistent with a healthy market. Still, most economists say 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 boost 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's down slightly from a year ago and well below the 40 percent that is typical in a healthy market.
Since the housing bubble went bust six years ago, banks have adopted tighter credit standards and are requiring larger down payments. That's left many would-be buyers 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 annually in November, real estate data provider CoreLogic said last week. That's the biggest annual increase since 2006, when the housing bubble burst. CoreLogic forecasts that home prices will rise 6 percent nationally this year.
Rising demand for homes has persuaded builders to step up construction, which adds to economic growth and hiring.
U.S. builders started work on homes in December at the fastest pace in 4 ½ years, the government said last week. And builders finished 2012 as their best year for residential construction since the early stages of the housing crisis.
The gains in home building helped boost construction hiring in December by 30,000 jobs — the most in 15 months.