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The National Association of Realtors reported a 0.7% rise in total existing-home sales in December month-over-month, with home sales in 2020 reaching the highest level since 2006, according to a press release. The NAR reported that activity in the major regions was mixed on a month-to-month basis, however, each of the four areas recorded double-digit year-over-year growth in December.
"Home sales rose in December, and for 2020 as a whole, we saw sales perform at their highest levels since 2006, despite the pandemic," said Lawrence Yun, NAR's chief economist. "What's even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market."
Yun expects that the momentum will carry over even with rates rising.
"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," said Yun.
According to the NAR, the median existing-home price for all housing types in December was $309,800, up 12.9% from December 2019 ($274,500), as prices increased in every region. The increase marks 106 straight months of year-over-year gains.
Total housing inventory at the end of December totaled 1.07 million units, down 16.4% from November and down 23% from one year ago (1.39 million), according to the report. Meanwhile, unsold inventory is at an all-time low.
"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," added Yun. "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 made up 31% of sales in December, unchanged from the same time in 2019, but down from 32% in November 2020.
"NAR will work with the incoming Biden administration in pursuit of policies promoting housing affordability and accessibility," said NAR president Charlie Oppler, a realtor from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby's International Realty. "We were pleased with the homebuyer tax credit President Biden proposed as a candidate and we look forward to continuing our work with Congress and the White House. We will aim to find common ground, especially related to ways of boosting home supply and working toward solutions that will protect and support homeownership and America's broader real estate industry."