Existing home sales in the US reach the highest level in 14 years

Job losses caused by the pandemic have concentrated in lower-paying industries, while higher-wage households and resources to buy a new home have better withstood the recession. The pandemic caused many of them to leave large cities for suburbs or smaller cities, while low lending rates made the trading decision easier. Once shelter restrictions were eased, sales took off in June and have rarely been marked since.

“It’s all because of the pandemic,” said Brittany McCreary, who and her husband bought their first home, a four-bedroom stone farm in York, PA, last month after leaving the Chicago area. “It simply came to our notice then. We always wanted to buy. ”

Existing home sales rose 0.7% in December from November to a seasonally adjusted annual rate of 6.76 million, the National Association of Realtors said on Friday. December sales rose 22% from a year earlier.

Strong demand to buy the house is expected to continue this year, economists say, boosting more economic activity, such as housing construction and sales of furniture and household items. But the lack of homes for sale raises house prices higher, making it more expensive for tenants trying to get into the property.

“Homeowners are smiling because they see price increases,” said Lawrence Yun, NAR’s chief economist. “Frustration comes from first-time buyers.”

Sales of existing homes, which account for the bulk of the real estate market, totaled 5.64 million in 2020, up 5.6% from 2019 and the highest level since 6.48 million in 2006, he said. NAR.

Economists say that today’s real estate market is less risky than in that boom of 14 years ago. Mortgage lending standards are stricter and the supply of housing on the market is lower than demand. Many homeowners facing financial difficulties can also take advantage of current policies that allow them to skip monthly payments and compensate them later.

The real estate market was ready for a strong year in early 2020, as interest rates fell and the great millennial generation continued to age in the early years of home buying. Home sales then fell in the spring due to widespread restrictions on shelter in their place, before returning quickly in the summer and fall.

“The real big factor was the record low level of mortgage rates … which really improved affordability for homebuyers,” said Frank Nothaft, chief economist at CoreLogic’s housing data provider. Inc.

For the week ended Thursday, the average rate on a 30-year fixed-rate mortgage was 2.77%, down from 3.6% a year earlier, Freddie Mac said..

While demand has increased, supply remains limited. Sellers remain cautious about listing their homes for sale, in part because of concerns about transmitting the virus, realtors say.

At the end of December, there were 1.07 million homes for sale, down 23% from December 2019, according to NAR. At the current pace of sales, at the end of December there was an offer of 1.9 months of houses on the market, a record level.

That inventory crisis stimulated the construction of new homes. Housing starts, a measure of U.S. home construction, rose 5.8 percent in December from November to the highest seasonally adjusted annual rate in 2006, the Commerce Department said Thursday. The housing builder’s confidence in the single-family real estate market rose to records in the second half of last year.

The average price of existing homes rose 12.9 percent in December from a year earlier to $ 309,800, close to a record $ 313,000 in October, NAR said. Overall, the average price increased by 9% to $ 296,500.

However, the momentum in the real estate market is expected to continue as mortgage rates remain low. Rising vaccination rates could cause more vendors to enter the market later this year.

“There is still a demand that is not being met,” said Doug Duncan, chief economist for Fannie Mae.

For the full year, existing home sales increased the most in the South, by 7%, and in the Midwest, by 6.4%. The South also recorded the biggest year-over-year gain in 2019.

In Charlotte, NC, demand is strong from shifting buyers from other states who want a lower cost of living, said Wendy Dickinson of Coldwell Banker. Also, first-time buyers are eager to take advantage of low rates, she said.

“When houses arrive on the market here, it is very, very typical for them to immediately participate in more offers,” she said.

News Corp.,

owner of The Wall Street Journal, also operates Realtor.com under license from NAR.

Write to Nicole Friedman to [email protected]