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Published: Dec 28, 2021 8 min read
Flying calculator with pencils and house keys.
Chris Gash for Money

From super-low mortgage rates to sky-high home prices, 2021 has seen a number of real estate records fall. The housing market continually outdid itself this year, seeming to set new records every month thanks to a home buying rush that started last year.

“The real estate market in 2021 was a continuation of the strong momentum carried over from 2020. Mortgage rates hovering at near-record lows fueled demand,” says Lawrence Yun, chief economist for the National Association of Realtors.

Low interest rates weren’t the only fuel to the housing market fire. As the country slowly emerged from COVID-19 lockdowns, buyers redefined “the perfect home” and expanded the lengths they would go to find it.

“The pandemic and the work-from-home flexibility changed people’s desire of what is the right home – whether it was a larger home with space for a home office or moving further out from expensive areas to seek greater affordability,” says Yun. “This change in preference also fueled housing demand.”

The price of homes reached new highs as buyers competed for a limited number of available homes. For homeowners though, it was a bonanza with new highs in home equity and record profits from sales.

As the year draws to a close, here’s a look at some of the new housing records set in 2021.

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1. The rate on a 30-year mortgage bottomed early

The average rate on a 30-year fixed-rate mortgage hit a record low of 2.65% on January 7, according to Freddie Mac.

The previous record of 2.66% was set just two weeks earlier, on December 24, 2020. In fact, January’s low capped an almost year-long streak of 16 new lows that began in March 2020, when the 30-year rate dropped to 3.29%. Since January, rates have risen but remain low. As of December 23, the current 30-year rate is 3.05%

Prior to the pandemic, the all-time low was 3.31%, set in 2012.

2. Inventory started the year low — and stayed there

The year started with a record low 1.04 million homes for sale. That represented just a 1.9 month supply at the pace of sales at the time. It was the lowest housing inventory since NAR started keeping track in 1999 and down from 1.07 million units in December 2020.

Since then, inventory has improved slightly but is nowhere near the six-month supply considered healthy. At the end of November, the housing inventory stood at just 1.1 million units — a 2.1 month supply.

3. Home sale prices appreciated like crazy

Annual home price growth reached a new high in October, increasing 18% year-over-year, according to housing data provider CoreLogic. It’s the largest margin of growth in the 45-years CoreLogic has been tracking.

While the October data is the most recent information available, there are some signs that price growth may be slowing down. Month-over-month price growth has been decreasing since hitting a peak in April.

4. Higher prices meant bigger loans

Purchase loan originations are on track to reach $1.61 trillion by the end of 2021, up from the previous record of $1.51 trillion set in 2005, according to the Mortgage Bankers Association. The new record is due to the high demand for homes plus increasing prices caused by stiff competition.

The average dollar amount of purchase loans also set a new record. The all-time high of $418,000 was set in February, according to the MBA. Since then, loan amounts have eased a bit. As of the week ending December 17, the average loan size was $416,200.

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5. Sellers asked for more money than ever before …

The median list price reached a record-high of $385,000 in June, breaking the previous record of $380,000 set in May, according to Realtor.com. It was the fifth straight month of record asking prices.

Since that mid-summer high, things have cooled slightly. The median listing price has been easing lower and is currently at $379,000. Pre-pandemic the record was $325,000 set in June 2019.

6 & 7 … and buyers delivered

The median sale price of existing homes also hit a new high in June reaching $362,800, according to NAR. In November, prices were $353,900, a record for the month.

Home sellers reaped the benefits of a red hot housing market as profit margins — the percentage of change between a home’s median purchase price and its resale price — increased by 48%. That’s the highest rate since 2012.

According to real estate data provider ATTOM, that translates into an average profit of $100,178 on the typical home sale during the third quarter of 2021. The previous high was $88,800 in the previous quarter.

8. Homeowners gained more home equity than they know what to do with

Increasing prices led to a record $9.4 trillion in tappable equity during the third quarter, according to real estate data company Black Knight. Tappable equity is the amount of money a homeowner would be able to access from their home while still retaining 20% equity.

The previous record was $9.1 trillion gained during the second quarter of this year. Compared to the pre-bubble market, tappable equity is almost 90% higher than in 2006.

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9. Homes sold at lightning speed

Competition for the small number of homes available hit a peak during the 4 week period ending on April 4 when 61.5% of homes under contract had an accepted offer in two weeks, the fastest pace since Redfin started tracking in 2012. Forty-six percent of homes had an accepted offer in one week.

Since then, the buying frenzy has cooled somewhat. For the four-week period ending December 12, 42% of homes under contract had an accepted offer in two weeks and 36% had an accepted offer in one week.

10. The rent was ‘too damn high’

Rental prices have been seeing double-digit year-over-year growth for the past five months, according to Realtor.com. The median rental price in the largest metropolitan areas rose to $1,771 per month in November, up 19.7% from November 2020 and the highest price recorded since Realtor.com started tracking rents in 2019.

That means renters are paying an average of $291 more per month in rent than they were a year ago. The largest increase is for 2-bedroom units, with the median price of a 2-bedroom increasing to $1,993, or an additional $330 per month.

11. Foreign investors stayed away

Pandemic lockdowns and restricted travel put a dent in foreign investment in the U.S. housing market. Both the number of homes purchased, and the amount spent by international buyers reached new lows over the 12 month period ending in March 2021, according to the National Association of Realtors.

Foreign investors purchased a total of 107,000 homes and spent $54.4 billion in real estate purchases, the lowest totals since 2011 when investors bought 210,800 properties and spent $66.4 billion.

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