According to the National Association of Realtors, December closed sales of homes that were previously owned fell to 4.6%, an annualized, seasonally adjusted rate of 6.18 Million units. Year-over year sales fell 7.1%

However, December still marked a solid year, driven by strong sales and the pandemic. Sales for the full year 2021 reached 6.12million, an 8.5% increase over 2020. The year was also the most successful since 2006.

The extremely low supply of homes for sale could have made sales more likely. At the December end, there were only 910,000 homes available for sale. This is a 14.2% drop from December 2020. This is a supply of 1.8 months at the current pace. A balance market, where buyers and sellers are equals 4-6 months supply is typically referred to as a “balanced market”. The inventory count of the NAR shows that both the month’s supply and the total supply have fallen to an unprecedented low since its beginning in1982.

Lawrence Yun is chief economist of the Realtors. “Homebuilders have made significant strides to increase their supply in 2022, but it will take years for them to correct gaps like those we saw recently,” he said.

Prices continued to be under pressure due to low supply. In December, the median home price was $358,000. This is an 8.8% increase over December 2020. There has been a small resurgence in home prices, which suggests that the demand for homes is strong.

The high-end market continues to see stronger sales, due to the greater supply. The December sales figures for homes between $100,000-$250,000 fell 23% from December 2012. However, the December statistics show that homes between $750,000-$1 million saw a 32% increase in home sales. The 38% increase in sales of homes priced over $1 million was a result.

The median home price was $346,900 for the entire year. This is a new record and represents the highest price increase since 1999. The median homeowner saw a 17% increase in the cost of their home, which resulted in a $50,200 gain in property wealth.

It was evident that strong demand is also apparent in the time it took to sell a house in December. Only 19. It is not considered to be very fast. Days-on-market stood at 21 as of December 2020.

Due to low interest rates, home prices have soared in the past two years. This may soon change. In October and November when the majority of December contracts were signed by customers, the average 30-year fixed rate was 60 basis points lower than today. The mortgage rate has been on the rise rapidly in recent months and many expect it to reduce the pressure on home prices.

After a November showing that was 24% weaker, first-time buyers are now making up 30%. They may be anxious about rising mortgage rates and could risk being priced out.

Yun said that although we anticipate mortgage rates increasing, not all people will want to take advantage of higher rates. However, Yun also stated that some may feel compelled to sell their home. However, rising mortgage rates often reduce home sales.