As supply vanishes, existing-home sales decline
After three straight months of gains, existing-home sales fell 4.6% to a seasonally adjusted rate of 6.18 million in December.
According to the latest Existing-Home Sales report released today by the National Association of Realtors, each of the four major U.S. regions witnessed declines last month.
Overall sales for 2021 increased 8.5%, however. Total existing-home sales include completed transactions of single-family homes, townhomes, condominiums, and co-ops.
On a year-over-year basis, sales were down 7.1% compared to the December 2020 rate of 6.65 million.
Single-family home sales decreased 4.3% last month to a seasonally adjusted annual rate of 5.52 million from 5.77 million in November and down 6.8% from one year ago.
The median existing single-family home price was $364,300 in December, up 16.1% from December 2020.
“December saw sales retreat, but the pullback was more a sign of supply constraints than an indication of a weakened demand for housing,” said Lawrence Yun, NAR’s chief economist. “Sales for the entire year finished strong, reaching the highest annual level since 2006.”
The economist expected existing-home sales to slow in the coming months due to higher mortgage rates. But employment gains and stricter underwriting standards ensure home sales are in no danger of crashing, Yun said.
He forecasts mortgage rates to remain below 4% by year-end and wages to hold firm due to a tight labor market.
“This year, consumers should prepare to endure some increases in mortgage rates,” Yun cautioned. “I also expect home prices to grow more moderately by 3% to 5% in 2022, and then similarly in 2023 as more supply reaches the market.”
Total housing inventory at the end of December amounted to 910,000 units, down 18% from November and down 14.2% from one year ago (1.06 million).
Unsold inventory sits at a 1.8-month supply at the present sales pace, down from 2.1 months in November and from 1.9 months in December 2020.
“We saw inventory numbers hit an all-time low in December,” Yun said. “Home builders have already made strides in 2022 to increase supply, but reversing gaps like the ones we’ve seen recently will take years to correct.”
The median existing-home price for all housing types in December was $358,000, up 15.8% from December 2020 ($309,200), as prices rose in each region. This marks 118 straight months of year-over-year increases, the longest-running streak on record.
Properties t remained on the market for 19 days in December, one day more than the 18 days seen in November, and down from 21 days in December 2020. About 79% of homes sold in December 2021 were on the market for less than a month.
“We wrapped up the year witnessing home sales exceed the previous year’s total and saw millions of families secure housing,” said NAR President Leslie Rouda Smith, a realtor from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. “I think the positive momentum will continue as the market prepares to finally see more supply in the coming months, meaning more buyers will be able to land their dream home.”
Here’s how existing-home sales for December 2021 break down by region:
Existing-home sales in the Northeast fell 1.3% in December, registering an annual rate of 750,000, a 15.7% decrease from December 2020. The median price in the Northeast was $384,600, up 6.3% from one year ago.
Existing-home sales in the Midwest slid 1.3% to an annual rate of 1,500,000 in December, a 2.6% decline from a year ago. The median price in the Midwest was $256,900, a 10.0% climb from December 2020.
Existing-home sales in the South retreated 6.3% in December, posting an annual rate of 2,700,000, a drop of 5.3% from one year ago. The median price in the South was $323,000, a 20.2% ascension from one year prior.
Existing-home sales in the West decreased 6.8%, reporting an annual rate of 1,230,000 in December, down 10.2% from one year ago. The median price in the West was $507,100, up 8.4% from December 2020.
The National Association of Realtors represents more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.