According to the National Association of Realtors, sales of closed homes in December fell 4.6% to a seasonally adjusted annual rate of 6.18 million units. Revenue fell 7.1% year on year.

However, December marked the end of a year of strong sales, largely driven by the Covid pandemic and the biggest generation, millennials, who are entering the home-buying years. Sales for 2021 were 6.12 million, an increase of 8.5% compared to 2020. It has been the busiest year since 2006.

Sales are likely to be higher except for a very low offer. At the end of December, only 910,000 homes were for sale, down 14.2% from December 2020. At the current sales rate, this equates to 1.8 months of supply. A fair market between buyers and sellers generally corresponds to an offer of between four and six months. Total and monthly supplies have been at historically low levels in NAR stock counts since monitoring began in 1982.

“Homebuilders have already made progress in 2022 to increase supply, but it will take years to close similar gaps as we have seen recently,” said Lawrence Yun, chief economist at Realtors.

The scarce supply put further pressure on prices. The average price of homes sold in December was $ 358,000, up 15.8% from December 2020. This is a slight acceleration in the rise in house prices, suggesting that demand remains strong.

Depending on the price, sales continue to be stronger at the higher end of the market simply because there are so many more options. Home sales fell between $ 100,000 and $ 250,000 by 23% in December from the previous month, while home sales increased by $ 32,000 between $ 750,000 and $ 1 million. Home sales increased 38% over $ 1 million.

For the full year, the median price was $ 346,900, the highest level ever and the largest price increase since 1999. With prices rising 17% year on year, the average homeowner earned $ 50 $ 200 in real estate in the last year.

Demand was also strong for the average number of days it takes to sell a house in December, just 19. This is considered relatively fast. As of December 2020, there were 21 days on the market. All-cash purchases remained high at 23% of all sales. Investors also remain active, accounting for 17% of sales in December, up from 14% a year ago.

Property prices have skyrocketed over the past couple of years, in part due to very low-interest rates. This may change soon. The average interest rate on the popular 30-year fixed-rate mortgage was about 60 basis points lower than it was today in October and November when most of the buying markets were signed in December. Mortgage rates have risen sharply over the past month, and some people expect this to bring home prices down slightly in the future.

First-time buyers appear to be returning to the market, accounting for 30% of sales after dropping 24% in November. These buyers could be drenched, for fear that mortgage rates will rise and become too expensive.

“We expect mortgage rates to rise, some people may want to get involved if rates continue to rise, but others may be too expensive,” Yun said. “But rising interest rates have generally hurt home sales.”

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