Data from the National Association of Realtors® (NAR) shows sales of existing homes concluded 2016 as the strongest year in a decade -- despite sales falling in December due to continuing affordability issues and historically low supply levels.
Total existing-home sales (completed transactions for single-family homes, townhomes, condominiums and co-ops) ended 2016 at 5.45 million sales, bypassing 2015 (5.25 million) as the briskest since 2006 (6.48 million).
Existing sales in December dropped 2.8% to an annual rate of 5.49 million in from 5.65 million in November. Sales are just 0.7 percent above one year ago.
NAR's chief economist, Lawrence Yun, said that the housing market's best year since the Great Recession ended on a positive but softer note. "Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market," Yun said. "However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December."
December's median existing-home price (all home types) was $232,200, up 4.0% from December 2015 ($223,200). This price increase marks the 58th straight month of year-over-year gains.
Nationally, total housing inventory by the end of December fell 10.8% to 1.65 million existing homes available for sale, the lowest level since NAR started following housing supply in 1999. Inventory is 6.3% below one year ago (1.76 million), and has dropped year-over-year for 19 consecutive months. Housing supply nationally is 3.6-months at the current sales velocity (vs. 3.9 months in December 2015).
Freddie Mac data shows the average commitment rate for a 30-year, conventional, fixed-rate mortgage bumped up in December to 4.20% from 3.77% in November. December's average commitment rate was the highest rate since April 2014 (4.32 percent).
First-time buyers drove 32 percent of sales nationally in December, unchanged compared to November and one year ago. First-time buyers also represented 32% of sales for all of 2016.