Existing-home sales snapped back solidly in December as more buyers reached the market before the end of the year.
The National Association of Realtors (NAR) reported that western states and the South led large increases in the U.S.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 14.7% to 5.46 million in December from 4.76 million in November. After December's turnaround (the largest monthly increase ever recorded), sales ended the year at 7.7% above 2014.
Lawrence Yun, NAR chief economist, said December's robust bounce-back caped off the best year of existing sales (5.26 million) since 2006 (6.48 million).
"While the carryover of November's delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months (of 2015) maintained the healthy level of activity seen in most of the year," he said.
"Additionally, the prospect of higher mortgage rates in coming months and the warm November and December weather allowed more homes to close before the end of the year."
The median existing-home price for all housing types in December was $224,100, up 7.6% from December 2014 ($208,200). The month's price increase marked the 46th consecutive month of year-over-year gains.
Total housing inventory at the end of December dropped 12.3% to 1.79 million existing homes available for sale, and ended the year 3.8% lower than a year ago (1.86 million). Unsold inventory was at a 3.9-month supply at the current sales pace, down from 5.1 months in November and the lowest since January 2005 (3.6 months).
"Although some growth was expected, the housing market will struggle in 2016 to replicate last year's 7% increase in sales," Yun added. "In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas."
The percentage share of first-time buyers was at 32% in December (matching the highest share since August), up from 30% in November and 29% a year ago. First-time buyers in all of 2015 represented an average of 30%, up from 29% in both 2014 and 2013. A separate NAR survey released in late 2015 revealed that the annual share of first-time buyers was at its lowest level in nearly three decades.
"First-time buyers were for the most part held back once again in 2015 by rising rents and home prices, competition from vacation and investment buyers and supply shortages," Yun said. "While these headwinds show little signs of abating, the cumulative effect of strong job growth in recent years and young renters' overwhelming interest to own a home should lead to a modest uptick in first-time buyer activity in 2016."
All-cash sales were 24% of transactions in December (27% in November) and are down from 26% a year ago. Individual investors, who account for many cash sales, purchased 15% of homes in December, down from both 16% in November and 17% a year ago. Sixty-four percent of investors paid cash in December.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage stayed below 4% for the fifth consecutive month but increased in December to 3.96% from 3.94% in November. The average commitment rate for all of 2015 was 3.85%.
Properties typically stayed on the market for 58 days in December, an increase from 54 days in November but below the 66 days in December 2014. Short sales were on the market the longest at a median of 86 days in December, while foreclosures sold in 68 days and non-distressed homes took 57 days. Thirty-two percent of homes sold in December were on the market for less than a month.
Distressed sales, foreclosures and short sales declined to 8% in December, down from 9% in November and 11% a year ago. Six percent of December sales were foreclosures and 2% were short sales. Foreclosures sold for an average discount of 16% below market value in December (15% in November), while short sales were discounted 15% (unchanged from November).
Single-family home sales jumped to 4.82 million in December from 4.15 million in November, and are now 7.1% higher than the 4.50 million pace a year ago. The median existing single-family home price was $226,000 in December, up 8.0% from December 2014.
Existing condominium and co-op sales increased 4.9% to a seasonally adjusted annual rate of 640,000 units in December from 610,000 in November, and are now 12.3% above December 2014 (570,000 units). The median existing condo price was $209,900 in December, which is 4.9% above a year ago.
Existing-home sales in the West catapulted 23.2% to an annual rate of 1.22 million in December, 8.9% higher than a year ago. The median price in the West was $321,100, which is 8.2% above December 2014.
Existing-home sales in the South leaped 14.6% to an annual rate of 2.27 million in December, and were 4.6% above December 2014. The median price in the South was $196,100, up 6.8% from a year ago.
December existing-home sales in the Northeast increased 8.7%, 11.9% above a year ago. The median price in the Northeast was $255,700, which is 5.3% above December 2014.
In the Midwest, existing-home sales jumped 10.9%, 9.9% above December 2014. The median price in the Midwest was $171,000, up 7.5% from a year ago.