Even with a pandemic, 2020 was a record-breaking year for Utah real estate. Utah Realtors sold the most homes ever while the median sales price hit a new high, according to the 2020 year-end report from the Utah Association of Realtors.
More than 60,000 properties exchanged hands last year — an increase of 10% from the previous record set in 2019. Meanwhile, the median sales price increased nearly 11% to $354,580. That’s up almost $35,000 compared to the median of $320,000 in 2019.
Despite the drop in sales during the spring COVID-19 shutdowns (second quarter sales were down nearly 9%), real estate came back even hotter in the summer and fall as sales consistently outpaced pre-pandemic levels. Third quarter sales were up 18%, and fourth quarter sales increased 20%. In 2020, Utah home buyers purchased 5,618 additional properties compared to 2019.
Annual U.S. existing-home sales also increased, although unlike Utah, they did not exceed the record set during the mid-2000s housing boom.
“Home sales rose in December, and for 2020 as a whole, we saw sales perform at their highest levels since 2006, despite the pandemic,” said Lawrence Yun, chief economist of the National Association of Realtors. “What’s even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market.”
As even more buyers start house-hunting this spring, the lack of available housing will continue to challenge buyers.
Over the last few months, housing inventory has been cut in half, sometimes even more. At the end of December 2019, there were more than 12,000 properties for sale. At the end of December 2020, there were fewer than 5,000.
That equates to less than one month of housing supply, making it the most competitive market for buyers on records going back to 2003.
“To their credit, homebuilders and construction companies have increased efforts to build, with housing starts hitting an annual rate of near 1.7 million in December, with more focus on single-family homes,” Yun said. “However, it will take vigorous new home construction in 2021 and in 2022 to adequately furnish the market to properly meet the demand.”
The housing shortage is particularly acute for first-time home buyers who are looking for starter homes. For homes priced less than $500,000, the number of properties for sale is down 68%. That’s compared to a smaller 36% decline for homes priced greater than $750,000.
Generally speaking, buyers will face the most competition along the Wasatch Front. Weber, Cache, Salt Lake, Utah, Tooele, Box Elder and Davis counties all have the most competitive housing markets in the state with 0.7 months of supply or less.
One positive for buyers is the low mortgage rates. Even with the 11% rise in Utah home prices, the Utah Association of Realtors Housing Affordability Index held steady because of the positive effect of record-low rates. In 2020, a Utah household making the median income had 103% of what was necessary to afford the median-priced home.
“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.”
Utah Realtors expect the active housing market to continue into the spring. Pending home sales, which indicate contracts signed to buy houses, increased 15% in December.
To learn more about what’s happening in the housing market in your area, contact a local Realtor. A directory of Utah Realtors is available at UtahRealtors.com.