Almost three months ago, I wrote that based on the year-over-year growth in purchase applications, the housing market should have a few existing home sales under 5,840,000. At the time, I said:
“The rule of thumb I am using for 2021 is that existing home sales, if they’re doing good, should be trending between 5,840,000- 6,200,000. This, to me, would be considered a good year for housing. This also means that we should have some prints above 6,200,000 like we have had already and below 5,840,000, which hasn’t happened yet. We ended 2020 with 5,640,000 existing home sales which was only roughly 130,000 more than 2017 levels.”
The year-over-year comps for 2021 are a mess because COVID-19 made the 2020 data so crazy. This just means we need to make some adjustments in the data to account for COVID-19. The existing home sales data is one area where adjustments are necessary.
The parabolic move in sales last year was due to makeup demand for the shutdown months when sales were frozen. The parabolic sales of the 2nd half of 2020 were just a makeup demand. People are getting confused by the fall from this peak, but this is to be expected.
Remember, total existing-home sales ended 2020 at 5,640,000. That was pre-cycle highs in demand, but not a blowout as this was only 130,000 more than 2017 levels. Every single sales print this year has been higher than where we ended 2020. Today’s 5,800,000 existing home sales print is slightly better than I thought it would be.