The National Association of Realtors reported This Week in Real Estate that the home price increase of 2021 set a record and existing home sales reached its highest level in fifteen (15) years. Despite new construction permits and starts exceeding expectations in December, inventory hit an all-time low. Below are a few newsworthy events from the third week of January that influence our business:
Annual Existing-Home Sales Hit Highest Mark Since 2006. “December saw sales retreat, but the pull-back was more a sign of supply constraints than an indication of a weakened demand for housing,” said Lawrence Yun, NAR’s chief economist. “Sales for the entire year finished strong, reaching the highest annual level since 2006.” “This year, consumers should prepare to endure some increases in mortgage rates,” Yun cautioned. “I also expect home prices to grow more moderately by 3% to 5% in 2022, and then similarly in 2023 as more supply reaches the market.” “We saw inventory numbers hit an all-time low in December,” Yun said. “Home builders have already made strides in 2022 to increase supply, but reversing gaps like the ones we’ve seen recently will take years to correct.”
Home Prices Rose Faster Than Ever in 2021. The Typical Home Gained $50,000 In Value. Home values rose faster than ever in 2021. The median sales price for an existing home was $346,900, up a whopping 17% from the prior year. “The price increase is a record,” says Lawrence Yun the chief economist for the National Association of Realtors which just came out with the new numbers. He adds that the rise in home values is “even stronger than the days of subprime lending.” Record low supply, coupled with strong demand, has pushed prices up quickly and dramatically. The price gains will begin to normalize,” he says. “And people should not anticipate another year of this double digit rate of appreciation.” Still, the housing market will remain out of balance so long as the supply of homes is so constricted. In fact, estimates are that the U.S. is short several million homes. And building more won’t happen overnight.
Housing Permits And Starts Ended Year At 2021 Highs. Residential construction numbers exceeded expectations again in December. The U.S. Census Bureau and the Department of Housing and Urban Development reported that permits for residential construction were up 9.1 percent from November to a seasonally adjusted rate of 1.873 million units, the highest of the year and 6.5 percent above the rate a year earlier. For the entirety of 2021 there were 1.725 million construction permits issued compared to 1.471 the prior year, a gain of 17.2 percent. Single-family permits grew 13.4 percent to 1.111 million and the 562,100 multifamily permits represented an annual increase of 26.4 percent. During the year, builders initiated construction on 1.595 million residential units, a 15.6 percent increase over the total in 2020. Single-family starts increased 13.4 percent to 1.123 million and the 460,100 multifamily units represented a 22.2 percent annual gain. There were 1.338 million housing units completed last year, a 4.0 percent improvement over 2020. Single-family completions grew 6.1 percent to 966,900 units while the 363,200 multifamily units that were finished represented an 0.4 percent decrease.
Did you know every home listed for sale with Berkshire Hathaway HomeServices Northwest Real Estate and Berkshire Hathaway HomeServices Real Estate Professionals is eligible to receive no-obligation home warranty coverage from American Home Shield or 2-10 Home Warranty the first six months the home is listed with our company?
