Existing Home Sales Rise to the Highest Level Since 2006

Mish

Total home sales in 2020 were the most since the housing bubble that preceded the great recession.

Annual Sales See Highest Level Since 2006

The National Association of Realtors reports existing home sales rose 0.7% in December, with Annual Sales See Highest Level Since 2006

Five Key Highlights 

  1. Existing-home sales totaled 5.64 million in 2020, up 5.6% from 2019 and the most since before the Great Recession.
  2. The median existing-home price for all housing types in December was $309,800, up 12.9% from December 2019 ($274,500), as prices increased in every region. December's national price increase marks 106 straight months of year-over-year gains.
  3. Total housing inventory at the end of December totaled 1.07 million units, down 16.4% from November and down 23% from one year ago (1.39 million). Unsold inventory sits at an all-time low 1.9-month supply at the current sales pace, down from 2.3 months in November and down from the 3.0-month figure recorded in December 2019. NAR first began tracking the single-family home supply in 1982.
  4. Properties typically remained on the market for 21 days in December, seasonally even with November and down from 41 days in December 2019. Seventy percent of the homes sold in December 2020 were on the market for less than a month.
  5. First-time buyers were responsible for 31% of sales in December, unchanged from the same time in 2019, but down from 32% in November 2020. NAR's 2020 Profile of Home Buyers and Sellers – released in late 20204 – revealed that the annual share of first-time buyers was 31%.

"Home sales rose in December, and for 2020 as a whole, we saw sales perform at their highest levels since 2006, despite the pandemic," said Lawrence Yun, NAR's chief economist. "What's even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market."

Seasonal Adjustments 

The chart shows the impact of seasonal adjustments. The total for 2020 was 5.64 million units, but the reported total for December alone was 6.76 million on a  seasonally-adjusted annualized basis.

About that Stimulus Package

The housing bubble is back in full swing.

That puts a huge question mark on $2 trillion in blanket Covid stimulus that Biden seeks. 

Recall that Trump was in favor of the shotgun approach as well. 

Mish

Comments (25)
No. 1-9
Sechel
Sechel

From what I can tell the luxury or near luxury sectors are not faring as well but I haven't see specific data

Realist
Realist

I have not paid too much attention to Biden’s 2T proposal and how it breaks down. I suspect that much of the aid will attempt to be targeted at the unemployed, the poor, the hungry, and those being evicted. Also small business owners and landlords.

I saw a clip from today where he seemed to imply the same thing.

Is there something in his proposal that specifically pushes the “housing bubble” further? Because the poor and hungry are not usually lining up to buy houses.

Dodge Demon
Dodge Demon

Former Chicago Blackhawks Coach Q recently sold his house in Chicago suburbs. House had $78,000 annual property tax bill for 2019.

I estimate half of the tax bill goes for the local school districts’ pensions, a bottomless pit of wealth confiscation in the Chicago metro area.

goldguy
goldguy

Mish, the financial world has changed much since the 2008 bailout. Back then if you recall, the 700 billion that Paulson wanted for MBS bailout was shocking and horrifical. Now days, that is chump change. Look at congress, I cannot find a conservative among the bunch, everyone is a liberal, even the so called conservatives. The economy is in such a mess, in order to get any GDP at all, the free money will flow uninterrupted from last year forward. Print, print, print, that is there answer to ALL problems...

Johnson1
Johnson1

Housing Inventory is at a record low too. 60% to 70% less than normal.

Eddie_T
Eddie_T

The biggest mistake an investor can make is to place your faith in a simple model, when the reality is complex, with many more variables than most writers examine.

The first thing to understand is that nearly every article you read, especially if it’s taken from the lay press.....or from a website with an agenda (ZH comes to mind)...that the writer probably has some kind of axe to grind. That he is talking his book. This blog is a refreshing exception, which is why I read it.

Any instrument, any asset you can own, should be examined carefully to see how it fits your particular age, risk appetite, goals....and abilities. Discipline is rare here in the gen pop of the US of A.

Leverage is a two edged sword......and many learn too late that it cuts both ways.....but when you use it properly it lets you multiply your wealth rather than just add to it.

Residential real estate (single family houses) presents a case where leverage can be used with somewhat reduced risk....because of the government policy to debase the currency slowly over time......and also because the credit to get the leverage....is available to working stiffs at what might be considered a reduced, even subsidized cost, also because of government policy to promote home ownership.

Cost inflation in housing is not a monolithic phenomenon either. Demographics drive inflation on a local level. Market analysis is important. Some places represent unique opportunities. Others suck.

All of the above.....is why I personally favor housing as an investment. Fwiw, I am not nearly as leveraged as the average homeowner with his 5X 80% LTV loan......but I damn sure am locked in for 30 years.

Johnson1
Johnson1
Eddie_T
Eddie_T said: The biggest mistake an investor can make is to place your faith in a simple model, when the reality is complex, with many more variables than most writers examine. The first thing to understand is that nearly every article you read, especially if it’s taken from the lay press.....or from a website with an agenda (ZH comes to mind)...that the writer probably has some kind of axe to grind. That he is talking his book. This blog is a refreshing exception, which is why I read it. Any instrument, any asset you can own, should be examined carefully to see how it fits your particular age, risk appetite, goals....and abilities. Discipline is rare here in the gen pop of the US of A. Leverage is a two edged sword......and many learn too late that it cuts both ways.....but when you use it properly it lets you multiply your wealth rather than just add to it. Residential real estate (single family houses) presents a case where leverage can be used with somewhat reduced risk....because of the government policy to debase the currency slowly over time......and also because the credit to get the leverage....is available to working stiffs at what might be considered a reduced, even subsidized cost, also because of government policy to promote home ownership. Cost inflation in housing is not a monolithic phenomenon either. Demographics drive inflation on a local level. Market analysis is important. Some places represent unique opportunities. Others suck. All of the above.....is why I personally favor housing as an investment. Fwiw, I am not nearly as leveraged as the average homeowner with his 5X 80% LTV loan......but I damn sure am locked in for 30 years.

Hi Eddie - You said you applied for the new PPT. Do you have some of your tenants not paying rent or is it because of vacancies?

Neoliberal Elitist
Neoliberal Elitist

Priced rents lately?

I just bought a decent condo and remodeled it to fit my lifestyle. Total cost was around $160K including purchase price.

The monthly difference between the mortgage/tax/association payment and renting a comparable place is about $1,500 a month. And rents keep going up.

Assuming a total collapse of 30% hits at the end of 2024, I’ll still have broken even versus renting. And in another 10 years it will be 100% mine — with rents and prices virtually guaranteed to be higher than they are today.

KidHorn
KidHorn

Reminds me of 2006. Back than people believed an economy could be based on people selling homes to each other at higher and higher prices. And then it all ended and many lost their homes. I see a similar outcome.


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