Note: December 2021 data below are the most recent released by the National Association of Realtors.
Total existing-home sales) completed transactions that include single-family homes, townhomes, condominiums and co-ops) dropped 4.6% from November to a seasonally adjusted annual rate of 6.18 million in December. From a year-over-year perspective, sales waned 7.1% (6.65 million in December 2020).
"December saw sales retreat, but the pull back 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."
Yun, however, does expect existing-home sales to slow slightly in the coming months due to higher mortgage rates, but noted that recent employment gains and stricter underwriting standards ensure home sales are in no danger of crashing. He forecasts rates to remain below 4% by year-end and wages to hold firm due to a tight labor market.
"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."
Total housing inventory at the end of December amounted to 910,000 units, down 18.0% from November and down 14.2% from one year ago (1.06 million). Unsold inventory sits at a 1.8-month supply at the present sales pace, down from 2.1 months in November and from 1.9 months in December 2020.
"We saw inventory numbers hit an all-time low in December," Yun said. "Home builders have already made strides in 2022 to increase supply, but reversing gaps like the ones we've seen recently will take years to correct."
The median existing-home price for all housing types in December was $358,000, up 15.8% from December 2020 ($309,200), as prices rose in each region. The South witnessed the highest pace of appreciation. This marks 118 straight months of year-over-year increases, the longest-running streak on record.
"As mortgage forbearance programs end, and as homebuilders ramp up production – despite the supply-chain material issues – we are likely to see more homes on the market as soon as 2022," said Yun.
Properties typically remained on the market for 19 days in December, one day more than the 18 days seen in November, and down from 21 days in December 2020. Seventy-nine percent of homes sold in December 2021 were on the market for less than a month.
First-time buyers were responsible for 30% of sales in December, up from 26% in November and down from 31% in December 2020. NAR's 2021 Profile of Home Buyers and Sellers – released in late 2021 – reported that the annual share of first-time buyers was 34%.
"There was a significant surge in first-time buyers at the end of the year," Yun said. "With mortgage rates expected to rise in 2022, it's likely that a portion of December buyers were intent on avoiding the inevitable rate increases."
Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in December, up from 15% in November and up from 14% in December 2020. All-cash sales accounted for 23% of transactions in December, down from 24% in November, and up from 19% from December 2020.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.10 in December, up from 3.07 in November. The average commitment rate across all of 2021 was 2.96%.
