2021 Existing Homes Sales At 15 Year High
With the end of 2021 almost a month in the rear view mirror now, a plethora of real estate data is inbound. The data that is coming in gives us a total view of the real estate market and just how historical it was in 2021. Throughout the year, real estate prices accelerated and surpassed even some of the most bullish expert expectations. With that being said, just what data surprised the most? And, what data came in as the most underwhelming? Here is the highlights of 2021 existing home sales, a year that set a decades high record.
2021 Existing Home Sales And Supply Constraints
The 2021 real estate market is one for the history books. Whether it was a dramatic increase in home prices and rents, a drastic decrease in supply, or record low days on market, the year will be remembered with the best of them. With depressed housing inventory that persisted throughout the entire year and into 2022, it is safe to assume that home sales would decrease from 2020 to 2021.However, this is not the case whatsoever. In fact, home sales increased significantly due to the lowest rates we have ever seen. While 2020 had a strong real estate showing, the first two quarters of 2020 kept the numbers from breaking records. With 2021 having lower rates than 2020, and a full twelve month cycle of sales, the year performed strongly.
Based on the numbers, 2021 was the strongest real estate market in terms of existing home sales in 15 years. To put a number to the madness, the annualized sales came in at 6.12 million. The last time we saw a real estate market this explosive in terms of sales was 2006. While 2006 was based on fraud and poor lending standards, 2021 was different. In fact, more qualified buyers were in the market in 2021 than 2006, but less houses were available on a population adjusted means. With higher lending standards and a harder path to homeownership, the fact 2021 is the best year since before the last meltdown says something.
End Of 2021 Slump
As to be expected with lower supply and record high demand, sales eventually slipped. In fact, the last month of 2021 had one of the largest month-to-month declines of the year. Part of this is because some seasonality has returned to the real estate market, but give some credit to the low inventory as well. Contracted closings in December came in 4.6% lower than the prior month. However, even with the slump in December due to inventory problems, we still saw a record year in 2021. With home sales increasing the most since 2006, there may be cause for concern based on inventory problems coming into 2022. Home sales increased, but the crazy stat some people are ignoring is that home prices increased the most since 1999. In 1999, the average sales price was less than half of the $350,000 median home sales price we saw in 2021.
Existing Home Sales Wrap Up
While there was a drop through December, there is no doubt that 2021 was a record year for home sales. The drop we saw in December was mainly due to the inventory and seasonality, however, there was some slight concern over rates. In fact, since December 2021, mortgage rates have increase by close to .6%. Mortgage rates have actually reached pre-pandemic levels for the first time since the pandemic. With mortgage rates ticking up, it is important to note that December actually featured the fewest houses listed for sale on record. Ever. This is making up to be a slower year in real estate in 2022, however, it will still be a strong year in the market.
According to one of the most prominent economists in real estate, Lawrence Yun of NAR (National Association of Realtors), “Even as sales are falling, the fact that prices are showing this strength is showing that buyers are there. But the lack of inventory is hindering some of the sales activity.”
Housing supply crunches, strong demand, and higher rates creates a market that we haven’t seen in a few years. At the current levels of inventory, it would take 1.8 months to sell all the homes on the market. 2022 will be a fun year to be a part of and we will see how the experts predictions pan out.