Existing-home sales in 2020 surged to the highest level in 14 years, landing 22% higher than a year ago, the National Association of REALTORS® reported Friday. Existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—posted big gains year over year and rose by 0.7% in December 2020 compared to November 2020’s already unseasonably high rates.
“This momentum is likely to carry into the new year, with more buyers expected to enter the market,” says Lawrence Yun, NAR’s chief economist. “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.”
Existing-home sales in December 2020 reached a seasonally adjusted annual rate of 6.76 million. Still, home buyers are finding a limited number of homes for sale. Inventory levels are at record lows. That has placed continued pressure on home prices, which continue to post double-digit yearly gains.
The median existing-home price for all housing types in December 2020 was $309,800, up nearly 13% compared to December 2019, NAR reports. Every major region of the U.S. saw home prices rise last month.
Here’s a closer look at key housing indicators from NAR’s latest report:
Days on the market: Seventy percent of the homes sold in December 2020 were on the market for less than a month. Properties typically remained on the market for 21 days that month, down from 41 days in December 2019.
Housing inventories: Total housing inventory at the end of December totaled 1.07 million units, down 23% compared to a year ago. Inventories are at an all-time low at a 1.9-month supply at the current sales pace. “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,” Yun says. “However, it will take vigorous new-home construction in 2021 and in 2022 to adequately furnish the market to properly meet the demand.”
First-time buyers: First-time buyers comprised 31% of sales in December, down from 32% in November.
Investors/second-home buyers: Individual investors and second-home buyers purchased 14% of homes in December, a decline from 17% a year prior. Investors and second-home buyers tend to account for the largest bulk of cash sales, which accounted for 19% of transactions in December.
Distressed sales: With moratoriums still in place, foreclosures and short sales comprised less than 1% of sales in December, down from 2% a year ago.
Here’s a closer look at existing-home sales fared across the country in December 2020:
Northeast: Existing-home sales rose 4.5%, a 27% increase compared to a year earlier. Median price: $362,100, up 19% from December 2019.
Midwest: Existing-home sales were unchanged in December compared to November, but were up 26.2% from a year earlier. Median price: $235,700, a 13.7% annual increase.
South: Existing-home sales rose 1.1% in December, up 20.7% annually. Median price: $268,100, an 11.3% increase from December 2019.
West: Existing-home sales dropped 1.4% compared to a month prior but are nearly 18% higher than a year ago. Median price: $467,900—up 14.2% from December 2019.