The numbers: Existing-home sales hit a 5.57 million seasonally adjusted annual rate in December, the National Association of Realtors said Wednesday.

The consensus forecast among economists surveyed by MarketWatch was for a 5.73 million annual rate.

What happened: Sales of previously owned homes tumbled in December as an ongoing inventory crunch worsened. Existing-home sales were down 3.6% for the month, though they were up 1.1% compared with a year ago. NAR said November’s selling pace was revised down to 5.78 million.

Sales for all of 2017 were just 1.1% higher than in the previous year, but that was still enough to make it the best year since 2006.

Read: Why it’s so hard to forecast home prices for 2018 — and why that should worry you

The big picture: The biggest force in the housing market is still lopsided supply and demand. Inventory in December dropped 11.4% for the month, and 10.3% for the year. It marked the 31st month in which supply was lower compared with a year ago. At the current pace of sales, it would take 3.2 months to sell all available inventory, the lowest since NAR began tracking in 1999.

That pushed prices higher — again. The median sales price in December was $246,800, up 5.8% compared with a year ago.

“The lack of supply over the past year has been eye-opening,” NAR Chief Economist Lawrence Yun said.

First-time buyers made up 32% of all transactions in December, up fractionally from 29% in November.

Sales tumbled 7.5% in the Northeast, 6.3% in the Midwest, and 1.7% in the South. The West saw just a 1.6% decline in December.

Read: Why aren’t there enough houses to buy?

Market reaction: The Dow Jones Industrial Average DJIA, -0.87% was little-changed after the data release.

What analysts have to say: The white-hot selling pace notched in November made a December correction inevitable, many analysts wrote after the NAR’s report was released.

Despite the monthly noise, sales in the final quarter of 2017 showed momentum, said Michael Englund, chief economist for Action Economics. “We expect a 5% contraction rate for existing home sales in Q1 with a hit from cold weather.”

The NAR and others have warned that the tax changes recently signed into law will stifle demand in the housing market. But some analysts believe that a little less demand might be healthy, in the absence of a big jump in supply.

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