Existing-home sales closed 2020 on the upswing, reaching their highest level since 2006, according to data from the National Association of Realtors (NAR [1]).
Total existing-home sales—which cover single-family homes, townhomes, condominiums, and co-ops—inched up by 0.7% from November to a seasonally-adjusted annual rate of 6.76 million in December. On a year-over-year measurement, sales spiked by 22.2% from a year ago (5.53 million in December 2019). Year-over-year sales were up by double-digits in the four regions tracked by NAR.
The median existing-home price for all housing types last month was $309,800, a 12.9% rise the $274,500 level recorded in December 2019. The national price for December was the 106th consecutive month of year-over-year gains.
However, one area of housing that did not rise was inventory. December’s total housing inventory of 1.07 million units was a 16.4% slide from November and a 23% fall from one year ago when the inventory level was 1.39 million. Unsold inventory fell to a 1.9-month supply at the current sales pace, down from 2.3 months in November and down from the 3-month figure recorded in December 2019. Last month was the lowest unsold inventory level since NAR first began tracking the single-family home supply in 1982.
Properties typically remained on the market for 21 days in December, unchanged from November but down from 41 days in December 2019. Last month, 70% of the homes sold were on the market for less than a month.
First-time buyers accounted for 31% of sales in December, unchanged from the previous month and only one percentage point lower than the previous year. Individual investors or second-home buyers purchased 14% of homes in December, unchanged from November and down from 17% in December 2019. All-cash sales accounted for 19% of last month’s transactions, down from both the previous month and previous year, while distressed sales involving foreclosures and short sales only represented less than 1% of all sales, equal to November’s percentage and a single percentage point lower year-over-year.
Lawrence Yun, NAR’s Chief Economist, predicted that “this momentum is likely to carry into the new year, with more buyers expected to enter the market. Although mortgage rates are projected to increase, they will continue to hover near record lows at around 3%. Moreover, expect economic conditions to improve with additional stimulus forthcoming and vaccine distribution already underway.”
As for the continued inventory woes, Yun observed, “To their credit, homebuilders and construction companies have increased efforts to build, with housing starts hitting an annual rate of near 1.7 million in December, with more focus on single-family homes. However, it will take vigorous new home construction in 2021 and in 2022 to adequately furnish the market to properly meet the demand.”