January 24, 2021
Existing home sales and new construction permitting and starts reach their highest level since 2006, far surpassing what analysts predicted. Meanwhile, mortgage rates continue to hover at near record lows, below 3%. We take a closer look This Week in Real Estate.
* Annual Sales See Highest Level Since 2006. Existing-home sales rose in December, with home sales in 2020 reaching their highest level since 2006, according to the National Association of Realtors. Activity in the major regions was mixed on a month-over-month basis, but each of the four areas recorded double-digit year-over-year growth in December. Total existing-home sales, completed transactions that include single-family homes, townhomes, condos and co-ops, rose year-over-year 22% from a year ago. Single-family home sales rose at a seasonally adjusted annual rate of 6.03 million in December, up 22.8% from one year ago. Lawrence Yun, NAR’s chief economist predicts a continuation of the strong activity that’s currently taking place in the housing market and in the overall economy. “Although mortgage rates are projected to increase, they will continue to hover near record lows at around 3%,” Yun said. “Moreover, expect economic conditions to improve with additional stimulus forthcoming and vaccine distribution already underway.”
* Construction Surges to Highest Levels in 15 Years. Residential construction finished out 2020 much more strongly than analysts had expected. The U.S. Census Bureau and Department of Housing and Urban Development reported significant increases in both residential permitting and housing starts in December. Lawrence Yun, chief economist for the National Association of Realtors said the December numbers represented the “biggest bang since 2006” for home construction and could mean the worst of the housing shortage might soon come to an end. The rate of residential completions jumped 15.9 percent in December and were up 8.0 percent year-over-year. Single-family completions rose 10.2 percent and were 9.0 percent higher than 12 months prior. Single family starts increased 12.0 percent for the month and 27.8 percent on an annual basis to 1,338,000 units. Single-family permits rose 7.8 percent in December from the prior month to a rate of 1,226,000 and are now up 30.4 percent year-over-year.
* Mortgage Rates Continue to Hover Near Record Lows. For nearly a year, mortgage rates have remained near historic lows. The 30-year fixed-rate mortgage fell this week to average 2.77%, Freddie Mac reported. Its lowest average on record was 2.65%, recorded earlier this January. “We’re now seeing rates fluctuate a bit as political and economic factors drive Treasury yields higher,” says Sam Khater, Freddie Mac’s chief economist. “However, we forecast rates to remain relatively low this year as the Federal Reserve keeps interest rates anchored near zero for a longer period of time if needed until the economy rebounds.” The National Association of REALTORS® predicts mortgage rates to rise only slightly over the course of the next few weeks, forecasting the 30-year fixed-rate mortgage to average 3% for the first half of this year. Freddie Mac reports the 30-year fixed-rate mortgage averaged 2.77% for the week ending January 21. Last year at this time, 30-year rates averaged 3.60%.