Utah Association of Realtors
Even though buyers struggled to secure homes amid inventory shortages, 2021 was the second-best year on record for Utah home sales. Utah Realtors sold more than 55,000 homes in 2021 — second only to the nearly 60,000 transactions that took place in 2020.
The numbers come from the Utah Association of Realtors 2021 annual home sales report, which was released this week.
“There was a significant surge in first-time buyers at the end of the year,” said Lawrence Yun, chief economist of the National Association of Realtors, referring to U.S. existing-home sales. “With mortgage rates expected to rise in 2022, it’s likely that a portion of December buyers were intent on avoiding the inevitable rate increases.”
Along with sales, home prices hit record-breaking territory in 2021. The Utah median home price soared to a new high in December, reaching $475,000 for the first time on UAR records dating back to 2003. That’s 117th consecutive months of year-over-year increases. Nationally, the streak of 118 straight months is the longest running on record.
For 2021, the Utah median sales price was $442,200 — up nearly 25% from the median of $355,000 in 2020. Along with Idaho, Utah has had some of the highest price increases in the nation.
The time a home stays on the market also hit a record low, averaging 22 days statewide in 2021.
The soaring prices and fast sales are the result of strong demand and not enough supply. In fact, the number of houses for sale hit a record low in December with only 3,049 active listings for the entire state.
That’s down nearly 27% from the 4,165 in 2020 and down a whopping 69% from the 9,852 listings in December 2019. It’s important to note that even in 2019 with more than 9,000 active listings, there wasn’t enough housing inventory.
With just over 3,000 listings, Utah unsold inventory sits at a 0.7 month-supply at the present sales pace. This is down from 0.8 months in December 2020 and ties the record low set in the first quarter of 2021.
Nationally, the situation was similar — although less severe — with 1.8-months of supply.
“We saw inventory numbers hit an all-time low in December,” Yun said. “Homebuilders have already made strides in 2022 to increase supply, but reversing gaps like the ones we’ve seen recently will take years to correct.”
In Utah, experts estimate a housing supply gap of about 44,000 units. While builders pulled a record 35,000 residential construction permits last year, it’s still not enough to make up the gap and address ongoing construction needs.
The supply constraints are affecting affordability. In 2021, Utah housing affordability fell about 18%. At the end of December, a Utah family making the median income only had 96% of what was needed to buy the median-priced home.
Rising interest rates and prices will continue to impact affordability, but Yun expects rates to remain below 4% and for wages to hold firm due to the tight labor market.
“This year, consumers should prepare to endure some increases in mortgage rates,” Yun cautioned. “I also expect home prices to grow more moderately by 3% to 5% in 2022, and then similarly in 2023 as more supply reaches the market.”
Local experts predict the increase in Utah home prices to be higher than that predicted nationally. Jim Wood, Ivory-Boyer senior fellow at the Kem C. Gardner Policy Institute, told Realtors last week that he expects Salt Lake home prices to rise 10-12% in 2022.
To learn more about housing market conditions and trends in your area, contact a local Realtor. A directory of Utah Realtors is available at UtahRealtors.com.