By Jeffrey Sparshott

U.S. existing-home sales fell in December, suggesting that limited inventories, climbing prices and higher mortgage rates will hold back the market in 2017.

Purchases of previously owned homes dropped 2.8% from the prior month to a seasonally adjusted annual rate of 5.49 million last month, the National Association of Realtors said Tuesday. That is the highest level since the housing bubble of the last decade. However, sales remain well below their 2006 pace of 6.48 million

Economists surveyed by The Wall Street Journal expected home sales to decline 1.8%.

Existing-home sales had posted the strongest sales pace in nearly a decade in November. The median sales price in December rose 4% from a year earlier, the 58th straight year-over-year increase. Inventories were the lowest since NAR started tracking them in 1999.

The median price climbed 5.2% from the prior year to $233,900. Prices are up 41% in past five years, partly a function of the limited supplies that are crimping sales. NAR is forecasting a slight gain to 5.52 million sales in 2017 amid tight supplies and higher mortgage rates.

Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com

(END) Dow Jones Newswires

January 24, 2017 10:37 ET (15:37 GMT)

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