Home sales activity ticked up in the final month of 2020 and annual sales activity reached its highest levels since 2006.
Existing home sales increased 0.7% to 6.76 million in December from a month earlier and up 22.2% from the same time a year ago, according to the National Association of Realtors (NAR). The results beat analysts’ estimates compiled by Bloomberg of 6.56 million.
“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, in a press statement. “What’s even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market.”
The results were surprising as pending home sales, which lead to actual sales, dipped in October and November, and most analysts expected to see a slight dip in actual sales as a result.
Total inventory at the end of December was 1.07 million units, down 16.4% from a month earlier and down 23% from a year ago, according to the NAR. Unsold inventory is now at an all-time low of 1.9 months’ supply at the current sales pace, down from 2.3 months in November.
Housing starts and building permits also ended the year at the fastest pace in 14 years. In December Florida housing starts were up 5.8% - and 12% for single family homes.
The housing market has been a bright spot in the overall economy during the COVID-19 pandemic. Record low mortgage interest rates, pent-up demand from COVID-19 lockdowns, have put upward pressure on home prices, which has been rising at rates not seen since March 2014.
The strong sellers market continues into 2021 with no end in sight.