The housing market has been booming for sellers for the past couple of years. The National Association of Realtors reported that overall home sales rose 8.5% in 2021 to 6.12 million. This is the highest annual level since 2006.
“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.”
This increase was good news even with the inventory hitting an all-time low since January 1999. The unsold exiting homes dipped to 910,000 (equivalent to 1.8 months of the monthly sales pace). Single-family home sales went down to a rate of 5.52 million which is a 4.3% decrease on a seasonally adjusted annual rate. Condominium sales were down 7.0% to 660,000 and co-op sales slipped 9.6%.
December 2021 reported a decrease of 4.6% from November 2021 in existing home sales at a seasonally adjusted annualized rate. All four U.S. regions saw a decrease in month-over-month data as well as on a year-over-year basis. The Northeast reported a 1.3% dip, the Midwest fell 1.3%, in the South a decrease of 5.3% and in the West a decrease of 6.8%.
Yun has concerns about the existing home sales slowing down due to an increase in mortgage rates. He does not feel that this will cause a huge dent in the housing market because of recent employment gains and stricter underwriting standards.
“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.”
“We saw inventory numbers hit an all-time low in December,” Yun said. “Homebuilders have already made strides in 2022 to increase supply, but reversing gaps like the ones we’ve seen recently will take years to correct.”
Housing inventory at the end of 2021 was down 18.0% and the median home price was up 15.8% to $358,000. The biggest year-over-year median list price was in Las Vegas at 32.4%, Austin (+28.8%), and Tampa (+25.4%).
“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.”
