Existing home sales dipped 4.6% in December from November after three consecutive months of gains, according to the National Association of Realtors (NAR). But it’s not all bad news as the trade group explains that overall sales for the year were actually up 8.5% from 2020, and hit the highest annual level since 2006. <\/p>\n
Weather typically pulls sales down in December, but what is interesting in this most recent data is that inventory levels hit an all-time low since reporting began in 1999. The pressure on the market from tight inventory of unsold existing homes has plagued the market in recent years as NAR has continued to emphasize. <\/p>\n
\u201cDecember saw sales retreat, but the pull back was more a sign of supply constraints than an indication of a weakened demand for housing,\u201d said Dr. Lawrence Yun, NAR\u2019s chief economist. \u201cSales for the entire year finished strong, reaching the highest annual level since 2006.\u201d<\/p>\n
Dr. Yun expects existing home sales will continue to slow a bit, given rising mortgage rates, but indicates that employment gains in a tight labor market, and increasingly strict underwriting standards insure sales levels are not in danger of crashing. <\/p><\/blockquote>\n
\u201cThis year, consumers should prepare to endure some increases in mortgage rates,\u201d Dr. Yun cautioned. \u201cI 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.\u201d<\/p>\n
As inventory levels tighten even more, Dr. Yun warns that although homebuilders are increasing supply, “but reversing gaps like the ones we\u2019ve seen recently will take years to correct.\u201d <\/p>\n