Economy Watch: Existing Home Sales See Healthy Increase
- Nov 20, 2012
Existing U.S. home sales were up to an annualized rate of 4.79 million units in October, according to the National Association of Realtors on Monday. That’s an increase of 2.9 percent from the previous month, and 10.9 percent from October 2011, and on the whole a solid report.
Perhaps more importantly—at least for driving prices up further—total housing inventory nationwide at the end of October fell 1.4 percent to 2.14 million existing homes available for sale, which represents a 5.4-month supply at the current sales pace, down from 5.6 months in September, the NAR reported. That’s the lowest housing supply since February 2006, when it was 5.2 months. Listed inventory is 21.9 percent below a year ago, when there was a 7.6-month supply.
The Realtors also calculated that the national median existing-home price for all housing types was $178,600 in October, which is 11.1 percent above a year ago. This October marked the eighth consecutive monthly year-over-year increase, and the last time that happened was from October 2005 to May 2006, back in the bubble days. This time around, no one’s calling it a bubble.
Homebuilders feeling much better
Fittingly, the National Association of Home Builders also released a report on Monday, and it found that builder confidence in the market for newly built, single-family homes posted a solid five-point gain so far in November to 46. That’s the closest the index has been to the optimism threshold of 50 since well before the housing bubble popped and the Great Recession decimated the new housing industry.
Two out of three of the index’s component indexes registered gains in November. The component gauging current sales conditions posted the biggest increase, with an eight-point gain to 49, its highest mark in more than six years. The component measuring sales expectations for the next six months held above 50 for a third consecutive month with a two-point gain to 53, and the component measuring traffic of prospective buyers held unchanged at 35 following a five-point gain in the previous month.
“While our confidence gauge has yet to breach the 50 mark—at which point an equal number of builders view sales conditions as good versus poor—we have certainly made substantial progress since this time last year, when the [index] stood at 19,” NAHB chief economist David Crowe observed in a press statement. “At this point, difficult appraisals and tight lending conditions for builders and buyers remain limiting factors for the burgeoning housing recovery, along with shortages of buildable lots that have begun popping up in certain markets.”
Wall Street was also feeling chipper on the Monday before Thanksgiving, perhaps on hopes that the fiscal cliff boogeyman might actually go away. The Dow Jones Industrial Average gained 207.65, or 1.65 percent, the most in quite a few trading sessions. The S&P 500 gained 1.99 percent, while the Nasdaq advanced 2.21 percent.