Northwest Arkansas Democrat-Gazette
Existing-home sales in U.S. rise by 0.7%
December data caps best year since ’06
Sales of existing U.S. homes increased unexpectedly in December, capping the best year for the housing market since 2006 as historically low mortgage rates helped power demand.
Sales rose 0.7% last month, providing one of the few bright spots for a U.S. economy mired in a global pandemic.
Rising sales in December lifted activity to a seasonally adjusted annual rate of 6.76 million units, the National Association of Realtors reported Friday.
For all of 2020, sales rose to 6.48 million, the highest level since 2006 at the height of the housing boom. That compares with 5.34 million previously owned homes sold in 2019.
The median home price was $309,800 in December, up 12.9% from a year ago.
The big jump in prices reflected strong demand as Americans locked down by the pandemic and forced to work from home are seeking to move to larger homes. Sales have been pumped up by record-low mortgage rates.
Economists predicted those trends would continue this year, though mortgage rates may rise slightly from record lows if the economy improves as expected as vaccines become more widely available.
“Homeowners are smiling because they’re seeing price increases,” Lawrence Yun, the association’s chief economist, said on a call with reporters. “The frustration is coming from the first-time buyers who don’t have any housing equity and they’re trying to save up for a down payment.
“Today’s market is unhealthy, people are making hurried decisions and prices are rising way above income growth,” Yun said.
“Expect economic conditions to improve with additional stimulus forthcoming and vaccine distribution already underway,” he said.
“As covid-19 levels drop due to vaccinations and warmer weather, expect more Americans to put their houses on the market,” Robert Frick, corporate economist at Navy Federal Credit
Union, predicted.
Available inventory declined 23% from a year earlier to 1.07 million units, the association said. It would take 1.9 months to sell all the homes on the market at the current pace, also a record low. That figure is down from 2.3 months in November and 3 months a year ago. Homes typically remained on the market for 21 days in December, down from 41 days that a home would be on the market before selling in December 2019.
Economists said homebuilders have increased construction in response to the strong demand but still face supply constraints such as a lack of available building lots.
For December, sales of single-family homes rose to a rate of 6.03 million while sales of condominiums increased to 730,000.
The report showed purchases of existing homes increased in two regions, including a 4.5% advance in the Northeast to a 14-year high and a 1.1% gain in the South.
Existing-home sales account for almost 90% of U.S. housing transactions and are calculated when a contract closes.
President Joe Biden’s proposed fiscal stimulus package, in addition to aid approved by Congress in late December, could prop up household incomes and lead to more purchases this quarter. A government report released Thursday showed that applications to build new homes rose in December to the best pace since late 2006 as builders responded to robust demand for singlefamily housing.