WASHINGTON (Reuters) - U.S. home resales rebounded in December, but continued low participation by first-time buyers in the market suggested the housing recovery would remain gradual for now.
The National Association of Realtors said on Friday existing home sales increased 2.4 percent to an annual rate of 5.04 million units last month. That was slightly below economists' expectations for a 5.06-million-unit pace.
"The still-tight mortgage credit conditions and more challenging first-time homebuyer affordability that were revealed by the failure of home sales to continue recovering last year remain serious concerns as we head into 2015," said Ted Wieseman, an economist at JPMorgan in New York.
First-time buyers made up 29 percent of transactions in December as well as for the year as a whole, well below the level needed to boost growth in the housing market.
For all of 2014, existing home sales fell 3.1 percent, the first annual drop in four years. The housing market has struggled to maintain momentum since stagnating in the second half of 2013 following a run-up in mortgage rates.
At December's sales pace it would take 4.4 months to clear all available houses from the market, down from 5.1 months in November and the lowest since January 2013.
However, a decline in mortgage rates, an easing of lending standards and the resurgent health of the U.S. economy over the last few months has spurred optimism that sales could strengthen this year.
And the outlook for the economy remains upbeat. In a separate report the Conference Board said its Leading Economic Index rose 0.5 percent last month after a 0.4 percent increase in November.
December's jump was driven by gains in most of the index's components, suggesting the short-term outlook is getting brighter and the economy continues to build momentum, the Conference Board said.
A third report showed manufacturing continued to expand in early January, though at a bit slower pace than in December.
Financial data firm Markit said its preliminary or "flash" U.S. Manufacturing Purchasing Managers Index fell to 53.7 in January, matching the 2014 low last January when severe weather impacted economic activity.
A reading above 50 signals expansion in economic activity. Factory employment increased for a 19th straight month, but new orders were the lowest in a year.
"The slowdown is being led by a weakening inflow of new orders, but the good news is that demand remained strong enough to drive yet another month of robust job creation at factories," said Chris Williamson, chief economist at Markit in London.
Writing by Lucia Mutikani and Lindsay Dunsmuir; Additional reporting by Rodrigo Campos in New York; Editing by Paul Simao