Current home sales reached an all-time high in 2021, as home buyers hurried to reap the benefits of ultra-low mortgage rates. Nationwide, sales increased by 8.5% in 2021, compared to 2020, according to the National Association of REALTORS® (NAR); however, as more home buyers are priced out and have fewer and fewer options for houses to buy, the coming year may see decreased sales statistics. There are already indications of a minor slowdown. While the number of unsold existing houses reached an all-time low in December 2021, home sales also dipped. According to NAR, total existing home sales (finished transactions that included single-family houses, townhomes, condominiums and co-ops) decreased 4.6% in December, compared to November. Month-over-month and year-over-year losses were seen in each of the United States’ four major regions. Sales fell in December, although the drop was due to supply restrictions, rather than a drop in demand for property. The year ended on a positive note, with sales hitting their pinnacle since 2006. What’s in store? As mortgage rates climb, existing home sales are projected to decline modestly in the coming months; however, recent job improvements and tougher underwriting rules will preserve house sales, and the real estate sector is not in danger of collapsing, according to the report. By the end of 2022, mortgage rates are predicted to remain below 4%, while salaries are expected to remain stable. Mortgage rates are expected to rise this year, so customers should plan accordingly. As additional supply enters the market, housing prices are predicted to climb more slowly, by 3%-5% in 2022, and then similarly in 2023. Five key housing indicators at a glance Here’s a deeper look at some of the most important housing data from NAR’s most recent report: 1. Inventory: At the end of December 2021, total housing inventory levels reached an all-time low: 910,000 units, down 18% from November 2021, and 14.2% from a year ago. Homebuilders have already taken steps to improve supply in 2022, but closing supply shortages like the ones we’ve seen recently would take years. 2. Home prices: In December 2021, the median existing home price across all property types was $358,000, up 15.8% from December 2020 ($309,200). All key areas of the U.S. saw advances, with the South leading the way. 3. First-time home buyers: In December 2021, first-time home buyers accounted for 30% of all sales, up from 26% in November. At the conclusion of the year, there was a considerable increase in first-time home buyers. Given that mortgage rates are predicted to climb in 2022, it’s possible that some December purchasers were looking to escape such hikes. 4. Investors and second home buyers: Second home buyers or investors, who account for the majority of cash transactions, bought 17% of properties in December 2021, up 14% from the previous December. In December, all-cash sales accounted for 23% of all transactions, up from 19% in December 2020. 5. Days on the market: In December 2021, 79% of houses sold were on the market for less than a month—an average of 19 days, down from 21 days in December 2020. Let’s see how current home sales fared around the country in December 2021:
- Current home sales in the Northeast fell 1.3%, to 750,000 units sold annually, down 15.7% from the previous year’s December. The median price was $384,600, up 6.3% from the previous year.
- Current home sales in the Midwest decreased 1.3%, to 1.5 million units, down 2.6% from a year earlier. The median price was $256,900, up 10% from the previous year’s December.
- Current home sales in the South fell 6.3%, to a seasonally adjusted annual rate of 2.7 million, down 5.3% from a year earlier. The median price was $323,000, down 20.2% from the previous year’s December.
- Current home sales in the West fell 6.8%, to 1.23 million, down 10.2% from a year earlier. The median price has increased by 8.4%, to $507,100.