Traditionally speaking, the holiday season is not when home buyers flock to sign on the dotted line. But 2020 was a different animal. Pending home sales reached a record high for December as the unseasonable housing surge continued in markets across the country during the COVID-19 pandemic.
According to Realtor Magazine, pending sales were up 21.4% year over year in December, reaching the highest reading for a December on the National Association of REALTORS®’ Pending Home Sales Index. All major regions of the U.S. recorded double-digit increases annually.
While housing shortages continue the upward pressure, National Association of Realtor’s chief economist Lawrence Yun says low inventory has actually slowed pending home sales.
“Pending home sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale,” said Lawrence Yun, NAR’s chief economist. “There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings. This elevated demand without a significant boost in supply has caused home prices to increase and we can expect further upward pressure on prices for the foreseeable future.”
He projects that 2021 will see strong economic growth, with low mortgage rates and fiscal stimulus thrown into the equation — all as part of an elixir that could help increase existing-home sales.
Yun predicts continued low mortgage rates that can help bolster existing-home sales to 6.49 million this year, which would be a 15% increase over the total 5.64 million sales from 2020.