Activity remained unseasonably high, though listing shortages threaten to take steam out of the housing market
The U.S. market continued an unseasonal rally in December, with pending sales hitting an all-time high for the month, according to an index released Friday.
Home buyers signed 21% more contracts in December than a year prior, as surging demand for homes kept dealmaking at unusually high levels given the time of year, according to the National Association of Realtors (NAR) Pending Home Sales Index.
Frenzied housing activity continued to show slight signs of deceleration, though it’s likely due to a severe lack of homes on the market, according to Lawrence Yun, chief economist at the NAR.
Signed contracts decreased by an ever-so-slight 0.3% in December compared to November, the fourth time in a row that dealmaking fell on a month-to-month basis. Pending sales peaked in August, though housing activity has remained at historically high levels since.
“Pending home sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale,” Mr. Yun said in a news release on Friday. “There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings.”
Regionally, the South had the strongest December, with contracts up 27% over December 2019. The Northeast was next, with dealmaking up 22% year-over-year, followed by the West, up 19% annually, and the Midwest, up 14%, according to NAR’s figures.
On a local level, Portland, Oregon; Las Vegas; Denver; Los Angeles and Boston have recorded the most significant recovery in their markets since the lockdowns of last spring, according to a separate index from realtor.com.
Home prices in these and many other cities have soared as a result of competition over too few homes in the wake of the pandemic, which has spurred many to seek out new living arrangements while working and schooling from home. Inventory shortages could improve this spring, however, as sellers list their homes during the peak buying season, economists have speculated.