ARLINGTON, Va.—Existing home sales fell 4.8% in December to a seasonally-adjusted annualized rate of 6.18 million units. This represents a 7.1% decrease in sales versus a year ago.
Supply chain issues remained a binding constraint with inventory dropping to 910,000 in December, accounting for just 1.8 months of supply based on current sales level, stated NAFCU Chief Economist and Vice President of Research Curt Long.
"Existing home sales fell for the first time in four months in December, hitting 6.1 million units on an annualized basis," said Long. "According to the National Association of Realtors, despite the drop in December, year-over-year sales for 2021 were up 8.5%."
Sales fell in all regions this month, with the West showing the largest losses, falling 7.5% during this month. The South fell 6.2% followed by the Midwest (-1.3%), as well as the Northeast (-1.3 %).
The median existing home price increased by $358,000 in December (not seasonally adjusted) – representing a 15.8% increase from a year ago, Long said.
Based on current sales, there were 1.8 months of supply at the end of December, which is down from 2.1 months in November. Analysts consider six months of inventory a rough balance between supply and demand.
First-Time Homebuyers ‘Sidelined’
“The resulting surge in prices has kept first-time homebuyers mostly sidelined,” stated Long. “However, that cohort made up 30% of sales in December compared to 26% in the prior month. That may reflect increased urgency on the part of rate-sensitive buyers. NAFCU expects home sales to continue on a modest upward trend in 2022, with supply constraints relaxing somewhat in the second half of the year as new inventory arrives and mortgage rates rise.”
As CUToday.info reported here, new data from the National Association of Realtors reveal just how strong the housing market was during 2021, including a new high for the average sales price of a home.