Existing Home Sales Strongest Since 2006 Despite Supply Limits

Fueled by low mortgage interest rates and strong demand, annual existing home sales reached 15-year high in 2021, according to the National Association of Realtors (NAR). However, supply has continued to lag due to ongoing supply-chain disruptions and inventory fell to lowest level since January 1999, keeping home prices elevated and pricing out first-time and young buyers.

Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, fell 4.6% to a seasonally adjusted annual rate of 6.18 million in December. On a year-over-year basis, sales were 7.1% lower than a year ago.

The first-time buyer share rose to 30% in December, up from 26% in November and down from 31% a year ago. The December inventory level declined from 1.11 to 0.92 million units and is still down from 1.06 million units a year ago.

At the current sales rate, December unsold inventory sits at an all-time low 1.8-month supply, down from 2.1-month last month and from 1.9-month a year ago. This low supply of resale homes is good news for home construction.

Homes stayed on the market for an average of just 19 days in December, one day more than 18 days in November and down from 21 days a year ago. In December, 79% of homes sold were on the market for less than a month.

The December all-cash sales share was 23% of transactions, down from 24% last month and up from 19% a year ago.

Tight supply continues to push up home prices. The December median sales price of all existing homes was $358,000, up 15.8% from a year ago, representing the 118^th consecutive month of year-over-year increases, the longest-running streak on record. The median existing condominium/co-op price of $305,100 in December was up 11.9% from a year ago.

Geographically, all four regions saw a decline in existing home sales in December, ranging from 1.3% in the Northeast to 8.3% in the West. On a year-over-year basis, sales also declined in all major regions, ranging from 5.2% in the Midwest to 15.7% in the Northeast.

Meanwhile, the Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI decreased 2.2% from 125.2 to 122.4 in November. On a year-over-year basis, sales were 2.7% lower than a year ago per the NAR data.