PhotoSales of previously-owned homes finished 2016 at their highest level in ten years.

According to the National Association of Realtors (NAR), existing-home sales -- completed transactions that include single-family homes, townhomes, condominiums, and co-ops – totaled 5.45 million for the year, surpassing 2015 as the highest since 2006 (6.48 million).

That performance came despite a December decline of 2.8% to a seasonally adjusted annual rate of 5.49 million -- the result of continuing affordability tensions and historically low supply levels.

Job creation, low mortgage rates get the credit

The housing market's best year since the Great Recession ended on a healthy but somewhat softer note. "Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market," said NAR Chief Economist Lawrence Yun. "However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December."

Yun blames the surge in mortgage rates since early November for the dip in sales as 2016 came to an end.

The median price for existing-homes last month was $232,200 -- up 4.0% from December 2015, marking the 58th consecutive month of year-over-year gains.

Total housing inventory at the end of December plunged 10.8% to 1.65 million existing homes available for sale. That's the lowest level since NAR began tracking the supply in 1999.

Inventory is down 6.3% from a year ago, has fallen year-over-year for 19 straight months, and is at a 3.6-month supply at the current sales pace.

Regional breakdown

  • Existing-home sales in the Northeast dipped 6.2% to an annual rate of 760,000 but are still up 2.7% from a year ago. The median price was $245,900, down 3.8% from December 2015.
  • In the Midwest, sales were down 3.8% to an annual rate of 1.28 million, but are still 2.4% above a year ago. The median price rose 4.6% from a year earlier to $178,400.
  • Sales in the South in December were unchanged at an annual rate of 2.25 million and are up 0.4% year-over-year. The median price was $207,600 -- a gain of 6.5%.
  • The West saw sales drop 4.8% from a year ago to an annual rate of 1.20. They're now 1.6% below December 2015. The median price rose 6.0% from the previous December to $341,000.

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