Despite the global pandemic, or perhaps because of it, home sales reached its best year since 2006.
The annual rate of current home sales in December rose to 6.76 million, seasonally adjusted, which, according to the monthly report of the National Association of Realtors, has increased by 0.7 percent since November and 22 percent year on year.
It was a strong end of the year, when the owners of 5.64 million existing homes were changed, an increase of 5.6 percent from 2019 to the highest level since 2006. Residential construction also announced the busiest year since 2006, although home builders’ confidence has begun to wane in the last two months despite record levels of housing inventory.
The offer of existing houses for sale reached another historic low with 1.07 million units on the market. At the current rate of sale, these houses will be sold within 1.9 months. Seventy percent of homes sold in December were listed in less than a month.
The median home price closed the year at $ 309,800, which is almost 13 percent more than in the previous year, marking the 106th month of consecutive price increases.
“The tight resale market is suitable for the new domestic market, which, like the resale market, also benefits from demographic shifts and low mortgage interest rates,” said Gregg Logan of RCLCO Real Estate Advisors. “For many home buyers, the pandemic has caused economic and life changes that have affected people on the move.”
Lawrence Yun, the NAR’s chief economist, said he expected December’s momentum to carry over to 2021, despite mortgage rates rising.
“Although mortgage rates are expected to rise, they will remain close to record lows of around 3%,” Yun predicted. “Expect economic conditions to improve with another stimulus being prepared and vaccines to be distributed.”
Other experts express concern that if prices continue to rise, demand will fall.
Joel Kan, head of industrial forecasts at the Mortgage Bankers Association, said in a statement on Friday that “disproportionate” growth in higher levels of the housing market could slow demand.
“There will be more pressing affordability challenges if stocks remain so tight and home price growth continues to accelerate.” Kan said. “This, in turn, would be especially challenging for the first home buyers, who make up a third of all home sales.”
There were similar concerns expressed more broadly last year, when lenders tightened borrowing criteria and excluded wealthy buyers from the market.
There were indications that home buyers had withdrawn. Pending home sales, an indicator of future sales, fell month-on-month September, October and October. Current sales fell in November, for the first time since June, when sales did not grow month-on-month. Compared to November 2019, however, sales still increased by almost 26 percent.