Is it the end of the end of the housing bubble? The National
Association of Realtors (NAR) seemed to think so as it issued its November report
on the sales of existing houses, the second month in a row when sales showed
slight improvement over the previous month.
New home sales also showed signs of recovering according to the joint report
the U.S. Department of Housing and Urban Development and the U.S. Census Bureau
also released this week.
Existing home sales including single-family, townhouses, condominiums, and
co-ops were up 0.6 percent to a seasonally adjusted annual rate of 6.28 million
units in November. This followed a 0.5 percent increase in October. The November
2006 figure was 10.7 percent below the 7.03 million-unit sales figure for November,
NAR's chief economist David Lereah said "As the housing market recovers from
its correction, existing-home sales should be rising gradually during
2007. It looks like we may have reached a more sustainable period of
home sales now, and we expect greater support for prices over time as inventory
levels are eventually drawn down."
He even saw a silver lining to declining housing prices. November's median
price for existing houses of all types was $218,000. This is 3.1 percent lower
than the $225,000 median one year earlier. Lereah said "For every 1.0
percent drop in home prices, we project an additional 50,000 buyers are drawn
into the market."
Inventories of existing houses fell 1.0 percent to 3.82 million
existing homes on the market. This is a 7.3 months supply at the current rate
of sales. At the end of October there was a 7.4 month backlog.
New single-family home sales in November sold at an annualized and seasonally
adjusted rate of 1,047,000 units. This was a 3.4 percent increase above the
revised October rate of 1,013,000 but is 15.3 percent below the estimated pace
in November, 2005.
There was a 6.3 month supply of new homes for sale at the end of November compared
to 6.7 months in October but the median marketing time increased from 3.8 to
The median sales price of new houses sold last month was $251,700
and the average sales price was $294,900. Corresponding figures for October
were $243,800 and $304,900. In spite of the softening market this year, prices
were still higher than in November 2005 when the median price was $237,900 and
the average was $294,400.
It is important to note that new home sales figures are compiled at the time
the contract is signed which may even be before a permit is issued. Contract
modifications and cancellations are not necessarily reflected in revised statistics.
The Census Bureau also warns that it takes 6 months to establish a trend in
the housing market. Still, any improvement in home sales generally is good news
for sellers and agents. Strong new home sales are vital to an economy that over
the last few years has been driven to a great extent by the construction industry.