Existing-home sales spiked in December following a slight drop in November, according to the latest data released Wednesday by the National Association of Realtors (NAR).
Existing homes finished the month at an annual adjusted rate of 5.54 million, up 10.8 percent year-over-year and 3.6 percent from November. On a full-year adjusted basis, existing-home sales finished at the same rate in 2019 as it did in 2018.
“I view 2019 as a neutral year for housing in terms of sales,” NAR Chief Economist Lawrence Yun said. “Home sellers are positioned well, but prospective buyers aren’t as fortunate. Low inventory remains a problem, with first-time buyers affected the most.”
Bill Banfield, Quicken Loans’ chief risk officer, believes that low interest rates in 2019 helped buyers make the leap to purchase more homes, but we will run into a demand issue in 2020.
“While December’s jump in home construction is positive as well, it will not sufficiently meet the demand likely to occur in 2020,” Banfield said. “This will continue to push prices upwards, stretching first-time buyers – who make up nearly a third of the market.”
Home price also spiked in December, with the median existing-home price for all housing types hitting $274,500 in December, up 7.8 percent year-over-year.
“Price appreciation has rapidly accelerated, and areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth,” Yun said. “The hope is for price appreciation to slow in line with wage growth, which is about 3 percent.”
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