Economy Watch: Existing Home Sales Bounce, NAR Says

The National Association of Realtors reported on Thursday that sales of existing homes rose in August to an annualized rate of 4.13 million, up 7.6 percent from the dismal month of July, but down 19 percent compared with August 2010.

September 24, 2010
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user bsabarnowl

The National Association of Realtors reported on Thursday that sales of existing homes rose in August to an annualized rate of 4.13 million, up 7.6 percent from the dismal month of July, but down 19 percent compared with August 2010. The organization didn’t use the term “dead-cat bounce” to describe the month-over-month increase, but upcoming months’ sales totals will determine whether that’s a fitting characterization.

The national median existing-home price for all housing types was $178,600 in August, up 0.8 percent from a year ago. Distressed homes rose to 34 percent of total sales in August from 32 percent in July; such sales were 31 percent of the total in August 2009.

A parallel NAR practitioner survey showed that first-time buyers bought 31 percent of homes in August, down from 38 percent in July. Investors rose to a 21 percent market share in August, up from 19 percent in July, and the balance of purchases were by repeat buyers. All-cash sales slipped to 28 percent in August from 30 percent in July.

Leading Economic Indicators Advance

The Conference Board’s Leading Economic Indicators Index (LEI) rose 0.3 percent in August, compared with the previous month. That kind of increase normally isn’t considered a notably strong upward trend, but normal went out the window a few years ago. In 2010 the rise is good, because it’s the strongest rise since May.

Meaning that things will muddle along. “While the recession officially ended in June 2009, the recent pace of growth has been disappointingly slow, fueling concern that the economic recovery could fade and the U.S. could slide back into recession,” said Ken Goldstein, an economist at the organization in a statement. “However, latest data from the U.S. LEI suggest little change in economic conditions over the next few months. Expect more of the same–a weak economy with little forward momentum through 2010 and early 2011.”

One caveat about the LEI: the components driving the increase were interest rate spreads and money supply, which are largely under the purvey of the Fed. Without those, the index would have dropped a bit, meaning that the private sector isn’t adding much to LEI growth at the moment.

Namvar Indicted for $23M Fraud

The former owner of such marquee properties as the downtown Los Angeles Marriott and the Cal Neva resort in Lake Tahoe, Ezri Namvar, has been indicted by a federal grand jury on wire fraud charges. Prosecutors allege that he diverted money (about $23 million) from some of his clients without them actually knowing about it, according to the Los Angeles Times.

Namvar has already seen his share of troubles related to real estate. In 2008, he was forced into bankruptcy by miffed creditors, who promptly placed $525 million worth of claims against he real estate mogul and his company, Namco Capital Group.

Wall Street was en route to an up day, but slipped in late trading. The Dow Jones Industrial Average lost 76.89 points, or 0.72 percent, while the S&P 500 dropped 0.83 percent but the Nasdaq only lost 0.32 percent.