Remember that whole “home sales are slowing down” thing from last month? Yeah, never mind.
That’s because as it turns out, the decline in home sales seen in November was just a slight bump in the road since both existing home sales and new home sales rose in December.
According to new data from the National Association of Realtors, existing home sales increased slightly in December, rising 0.7% over November’s results. November saw existing home sales fall by 2.5% from October’s total, which broke a five-month streak of increases.
But the decline was short-lived as existing home sales rose a bit in December. However, existing home sales in December 2020 were up by 22.2% when compared to December 2019’s sales data.
That helped existing home sales close out 2020 in a record-breaking position. According to the NAR report, there were 5.64 million existing homes sold in 2020, the highest that figure has been since 2006.
"Home sales rose in December, and for 2020 as a whole, we saw sales perform at their highest levels since 2006, despite the pandemic," said Lawrence Yun, NAR's chief economist. "What's even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market."
As for new home sales, a new report from the Census Bureau and the Department of Housing and Urban Development showed that new home sales also rose by a small amount in December compared to November. That, too, somewhat reversed the previous month’s decline, as new home sales rose 1.6% in December over November, which saw new home sales fall by 11% from October.
As for 2020 as a whole, according to the government report, there were an estimated 811,000 homes sold in 2020, which is 18.8% above 2019’s total.
And in terms of what to look for over the rest of 2021, Yun says sales activity is expected to remain strong.
One thing standing in the way, as has been the case for many months, is the dearth of available inventory on the market. According to NAR’s report, there were only 1.07 million homes on the market at the end of December, down 16.4% from November and down 23% from December 2019.
But help may be on the way as new home construction rose in December at time when new homes are sorely needed.
"To their credit, homebuilders and construction companies have increased efforts to build, with housing starts hitting an annual rate of near 1.7 million in December, with more focus on single-family homes," Yun said. "However, it will take vigorous new home construction in 2021 and in 2022 to adequately furnish the market to properly meet the demand."