The December Sales Data Nobody's Reading Correctly
Min 1
December existing home sales jumped 5.1% month-over-month to a seasonally adjusted annual rate of 4.35 million units as mortgage rates dropped below 6.2% for the first time since October, marking the strongest sales pace in nearly 3 years. The National Association of Realtors data shows 2025 became the slowest year since 1995 with 4.061 million homes sold compared to 4.062 million in 2024, a difference of exactly 1,000 transactions that disappears in rounding errors. The median home price hit $405,400 in December, a 0.4% increase from December 2024 and an all-time high for any December on record, representing the 30th consecutive month of annual median price increases. Inventory stood at 1.18 million homes at month-end, up 3.5% from a year earlier but still catastrophically below the 2 million homes typical before COVID, translating to a 3.3-month supply far below the 5 to 6 months considered balanced.
Min 2
Freddie Mac tracked mortgage rates closing the year at 6.15%, down from 7% at the start of 2025 and the lowest level in 15 months, triggering December's sales acceleration as buyers who waited all year finally moved when financing costs dropped below psychological thresholds. Realtor.com reported 69% of U.S. mortgages carry rates at 5% or lower with more than half at 4% or below, keeping these homeowners locked in place by rate differential until life events force non-discretionary sales. The South led all regions with 6.9% monthly growth while the West posted 6.6%, indicating buyer urgency returned fastest in these submarkets where operators who secure contracts in Q1 2026 lock in financing before spring buying season drives prices higher. Lawrence Yun forecasts a 14% jump in existing home sales for 2026, the most optimistic projection among economists whose estimates range from 1.7% to 9% growth.
Min 3
Properties purchased in December 2024 at $405,400 median with conservative 3% appreciation by May 2026 add $12,162 in equity, representing a 48% return on a $101,350 down payment in 5 months when leveraged at 75% loan-to-value. The Northeast median reached $496,700, up 3.7% year-over-year, while the Midwest posted $306,000, up 3.1%, and the 3.3-month supply indicates continued seller leverage despite inventory gains since anything below 5 months favors sellers in pricing negotiations. December buyers who wholesale properties or flip renovations in April and May 2026 will face peak demand from buyers who missed winter rates, capturing the spread between December acquisition costs and spring selling prices. The median price trajectory shows 30 consecutive months of annual increases unbroken even as sales volume collapsed, proving price resilience that rewards operators who bought the December bottom.
Min 4
The South delivered both volume growth and price appreciation, gaining 3.6% year-over-year in sales while median prices climbed to an annual rate of 2.02 million units, indicating fundamental demand strength in Atlanta, Charlotte, Nashville, and other growth markets. The West's 6.6% monthly surge came despite year-over-year flatness, suggesting sudden buyer re-entry in California, Arizona, and Nevada markets that experienced the most dramatic rate sensitivity with buyers returning when rates approached 6%. First-time buyers accounted for only 24% of 2024 purchases according to NAR data, down from 50% in 2010, meaning experienced buyers with equity from prior homes dominate transactions and create competitive pressure for quality inventory. Small investors who monitor monthly trends rather than annual summaries saw December's acceleration 60 days before institutions react, an information asymmetry that compounds when regulations force large players into 12-month strategy overhauls.
Min 5
December's acceleration caught Wall Street flat-footed because annual figures still looked disastrous, but small investors who act on 3-year high sales velocity while everyone discusses 30-year low annual volumes capture mispricings institutions miss entirely. Markets turn on monthly momentum, not annual totals, and this timing advantage democratizes opportunity for operators who can move in weeks while BlackRock spends quarters revising investment committees. Yun's 14% growth forecast assumes rates stay near 6% and inventory increases gradually starting in February, both conditions that favor operators who locked December contracts and can close before spring competition intensifies. The spread between December's quiet entry point and spring's volume surge creates a 90 to 120-day window where small operators build positions that institutions structurally cannot match.
Takeaway
December delivered a 3-year high in monthly sales velocity disguised inside the worst annual total since 1995, creating perfect conditions for operators who read monthly data instead of headlines. The rate compression from 7% to 6.15% triggered buyer capitulation after a year of waiting, and that pent-up demand will flood Q1 and Q2 2026 as long as rates hold. Small investors who secured contracts in December locked financing at the bottom and positioned ahead of Yun's predicted 14% volume surge, capturing both the rate advantage and the spring appreciation cycle that historically follows winter buying seasons. The window closes as soon as institutions recognize the monthly momentum shift, probably by March when Q1 data confirms the trend.
