US existing home sales hit 14-year record despite pandemic


US existing home sales hit 14-year record despite pandemic

Sunday, January 24, 2021

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EXISTING home sales totalled US$5.64 million in 2020, 5.6 per cent higher than in 2019, the National Association of Realtors (NAR) said.

Even as prices rose due to high demand and constrained supply, low borrowing rates and the pandemic's disruptions to daily life allowed those who could afford it to buy homes.

In December, the pace of sales rose more than expected to US$6.76 million annualised, 0.7 per cent more than November but 22.2 per cent higher than the same month last year.

“Home sales rose in December, and for 2020 as a whole, we saw sales perform at their highest levels since 2006, despite the pandemic,” NAR Chief Economist Lawrence Yun said.

“What's even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market.”

Ian Shepherdson of Pantheon Macroeconomics disagreed, saying much of the gains were fuelled by a wave of home buying that peaked over the summer.

“We expect a renewed, sustained, increase in housing activity in the spring, when the COVID-19 pandemic should be receding, but sales are unlikely to rise further before then,” he said in an analysis.

Home builders have struggled to keep up as sales of new and existing homes boomed, with inventory dropping to 1.07 million units – 16.4 per cent lower than November and down 23 per cent from the year-ago period.

Unsold inventory is at a 1.9-month supply, NAR said, an all-time low.

Strong demand caused prices to jump 12.9 per cent in December, from the same month in 2019, to a median of US$309,800.

Joel Kan of Mortgage Bankers Association warned the rising prices and tightening inventory could cut into future sales.

“More acute affordability challenges will emerge if inventory stays this tight and home-price growth continues to accelerate,” he said in a statement. “This in turn would be especially challenging for first-time homebuyers, who make up a third of all home sales.”

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