By Sarah Chaney and Paul Kiernan 
 

WASHINGTON-Sales of previously owned U.S. homes declined sharply in December, suggesting sluggishness in the once-hot housing market may persist into 2019.

Existing-home sales fell 6.4% in December from the previous month to a seasonally adjusted annual rate of 4.99 million, the National Association of Realtors said Tuesday. Economists surveyed by The Wall Street Journal had expected sales to notch a 5.25 million annual rate last month.

Compared with a year earlier, sales in December declined 10.3%.

For 2018 as a whole, home sales logged a 5.34 million annual pace, the softest year for sales since 2015.

In 2018, weakness in home sales reflected a lack of inventory and rising home prices, which have locked many buyers out of the more desirable markets. Meanwhile, mortgage rates have risen sharply in the last year, though they've tapered off in recent weeks, leading to an uptick in homebuilder confidence.

Lawrence Yun, the trade group's chief economist, said he expects a revival in home sales due to lower mortgage rates.

"Softer sales in December reflected consumer search processes and contract signing activity in previous months when mortgage rates were higher than today," Mr. Yun said. "Now, with mortgage rates lower, some revival in home sales is expected going into spring."

Still, consumers face other headwinds including volatile financial markets and still-high home values.

The median sale price for an existing home in December was $253,600, up 2.9% from a year earlier. There was a 3.7-months' supply of homes on the market at the end of December, based on the current sales pace.

The Trump administration's 2017 tax law also reduced some incentives for homeownership, especially in costlier, high-density markets and high-tax areas, by reducing the cap for the deductibility of mortgage interest and limiting the amount of state and local taxes that can be deducted.

Purchases of previously owned homes account for the bulk of U.S. home-buying activity. The Commerce Department's releases on new-home sales data will be delayed until the government is open again.

News Corp., owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.

Write to Sarah Chaney at sarah.chaney@wsj.com and Paul Kiernan at paul.kiernan@wsj.com.

(END) Dow Jones Newswires

January 22, 2019 10:15 ET (15:15 GMT)