Closings on existing homes beat estimates in December, rising 2.2% from November to a seasonally adjusted annual rate of 4.24million units. Closings were also 9.3% higher than a year ago, which the National Association of REALTORS® (NAR) noted was the largest annual increase since June 2021.
What’s the bottom line? This was a strong report for December, given that it measured people who were likely shopping for homes in October and November, when rates were elevated.
NAR’s Chief Economist, Lawrence Yun, added that “home sales during the winter are typically softer than the spring and summer, but momentum is rising with sales climbing year-over-year for three straight months. Consumers clearly understand the long-term benefits of homeownership. Job and wage gains, along with increased inventory, are positively impacting the market.”
However, this uptick in buyer demand also comes when inventory is still well below pre-pandemic norms. There were 1.15 million units available for sale at the end of December (-13.5% MoM and +16.2% YoY), though many homes counted in existing inventory are under contract and not truly available for purchase. In fact, there were only 872,000 “active listings” at the end of last month, so inventory is tighter than the reporting implies.
This pent-up demand for homes combined with ongoing tight supply continues to bode well for housing as an investment and continued home price appreciation over time.