Home Sales Hit All-Time High for December, Listings at Record Low
Typically, the holiday season, and then winter, bring a slowdown of home sales and increased time on market for home listings. But, as with so many things, 2020 brought an exception to the rule. Time on market in December hit a speedy 21 days on average, and sales were 22% stronger than in December 2019. These figures are indicative of the housing market for most of last year.
A report released by the National Association of Realtors and reported by CNBC notes that home sales in 2020 hit their highest levels since 2006, with $5.64 million units sold. Lawrence Yun, NAR chief economist, said sales could have reached 8 million if the inventory was there. In December, just 1.07% of homes were for sale. That’s a 1.9-month supply, the lowest seen in recent history.
Housing shortages have been an issue, with new home construction down due to the pandemic. Also due to the pandemic, people have been less willing to sell the most desirable homes — especially those in suburban areas with spacious yards and dedicated home office spaces or bonus rooms.
Low interest rates have also driven home sales, but the steep competition has many first-time homebuyers being shut out. First-time homebuyers only made up 31% of sales in 2020, when they usually comprise about 40% of the market, according to the NAR report. Biden’s proposed tax credit for first-time homebuyers and other measures could help first-time homebuyers gain an edge over the competition, which has included more all-cash buyers than usual, CNBC says.
The median home price also increased in 2020, up 12.9% since December 2019. The median price for existing home sales was $309,800 in December 2020, the highest on record for that month. Meanwhile, sales of homes below $100,000 were down 15% annually. Million-dollar-plus home sales increased by 94% since 2019, and homes priced between $500,000 and $750,000 also rose sharply, with a 65% increase.
Will the housing bubble burst? As long as the Fed keeps interest rates low and Biden takes measures to pass legislation to encourage new construction, this seller’s market could continue for quite some time.
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