Existing-home sales jumped 5.1% in December, marking the strongest sales pace in nearly three years as falling mortgage rates encouraged buyers to close deals before the new year.

The seasonally adjusted annual rate hit 4.35 million, a 1.4% increase from a year ago, according to recent data from the National Association of Realtors (NAR). The surge ended a challenging year characterized by high prices and low inventory, with NAR Chief Economist Lawrence Yun noting improved conditions in the fourth quarter in a press release accompanying the report.

“2025 was another tough year for homebuyers, marked by record-high home prices and historically low home sales,” he said. “However, in the fourth quarter, conditions began improving, with lower mortgage rates and slower home price growth. December home sales, after adjusting for seasonal factors, were the strongest in nearly three years.”

Economists at Wells Fargo highlighted in an analysis that December marked the fourth consecutive monthly gain for resales, a streak not seen since 2020. They attributed the recent easing in mortgage rates — which are hovering near 6% — to President Donald Trump’s proposal for Fannie Mae and Freddie Mac to purchase $200 billion of mortgage-backed securities.

However, the bank’s analysts tempered expectations.

“We are not expecting a significant decline in mortgage rates from here,” they wrote in their Wednesday note. “This means home sales, though on the mend, are not likely to show a lot of energy in the year ahead.”

And despite the increase in transaction volume, NAR’s data indicated price relief remains elusive for buyers. The median existing-home price for all housing types rose 0.4% on the year to $405,400 in December. This marks the 30th consecutive month of year-over-year price increases, according to NAR data.

Broken down by property type, single-family home prices rose 0.2% to a median of $409,500, while condominium and co-op prices saw a stronger gain of 1.5%, reaching $364,400.

The supply of homes on the market contracted sharply at the end of the year. Total housing inventory was recorded at 1.18 million units, an 18.1% decrease from November, though this figure is still 3.5% higher than in December 2024.

At the current sales pace, unsold inventory sits at a 3.3-month supply, down from 4.2 months in November.

“Inventory levels remain tight,” Yun observed in his statement. “With fewer sellers feeling eager to move, homeowners are taking their time deciding when to list or delist their homes.” He noted, however, that in keeping with historical trends, he expects more inventory to become available in February. 

The recent NAR report showed sales activity had improved in three out of the four major U.S. regions on a monthly basis, with the Midwest’s 2% decline serving as the outlier.