An index tracking pending U.S. home sales reported its fourth consecutive monthly drop in December.
But it was still the busiest December ever for buyers inking contracts for homes. Contract signings were up 21 percent compared to the same month in 2019.
Though a drop in pending home sales is often thought to indicate a drop in demand from homebuyers, Lawrence Yun, NAR’s chief economist, attributed the index’s monthly declines in the fall to the historically low housing inventory.
“There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings,” he said in a statement.
He added that he expects home prices to continue to rise with inventory still well below normal.
All regional indices tracking pending sales reported year-over-year gains. As for month-over-month changes from November to December, sales contracts in the Northeast and Southern regions bucked the national downward trend, reporting increases of 3.1 percent and 0.1 percent, respectively.
The annual pace of existing home sales in December surpassed the highest on record, which was at the height of the housing bubble in 2006, according to NAR. Supply dropped to the historically low level of just over 1 million homes on the market, which would take under two months to be sold at last month’s pace.