U.S. Home Sales Reach Highest Level in 14 Years -- Update
By Nicole Friedman
Sales of previously owned homes rose in 2020 to the highest
level since 2006, as ultralow interest rates and remote work during
the pandemic increased homebuying demand.
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 Friday. The December sales marked a
22% increase from a year earlier.
Existing-home sales totaled 5.64 million in 2020, up 5.6% from
2019 and the highest level since the 2006 pace of 6.48 million, NAR
The Covid-19 pandemic transformed the housing market in 2020, as
home sales plunged in the spring due to widespread shelter-in-place
restrictions and then quickly rebounded in the summer and fall. In
a bright spot for the U.S. economy, strong demand is expected to
continue this year, spurring more home construction and sales of
furniture and home goods.
"Homeowners are smiling, because they are seeing price
increases," said Lawrence Yun, NAR's chief economist. "It's just
lack of inventory that is holding back even greater home
Economists surveyed by The Wall Street Journal expected a 2%
monthly decline in sales of previously owned homes, which make up
most of the housing market.
Economists say today's housing market is less risky than during
the last boom in 2006. Mortgage lending standards are tighter, and
the supply of homes on the market is lower relative to demand. Many
homeowners facing financial difficulties can also take advantage of
current policies allowing them to skip monthly payments and make
them up later.
The housing market was poised for a strong year in early 2020,
as interest rates fell and the large millennial generation
continued to age into its prime homebuying years. Mortgage rates
have continued to decline since then. 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, said Freddie Mac.
"The real important driver has been the record low level of
mortgage rates...which really enhanced affordability for home
buyers," said Frank Nothaft, chief economist at housing-data
provider CoreLogic Inc.
While demand has climbed, sellers remain wary of listing their
homes for sale, partly due to concerns about virus transmission,
real-estate agents say.
There were 1.07 million homes for sale at the end of December,
down 16.4% from November and down 23% from December 2019, according
to NAR. At the current sales pace, there was a 1.9-month supply of
homes on the market at the end of December, a record low.
Write to Nicole Friedman at email@example.com
(END) Dow Jones Newswires
January 22, 2021 10:34 ET (15:34 GMT)
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