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Monday, November 23, 2009

Existing Home Sales Jump

Washington Post details:

The National Association of Realtors reported that sales of existing single-family homes, townhomes and condominiums in October surged to a seasonally adjusted annual rate of 6.1 million units from 5.54 million in September -- making last month the strongest since February 2007. Sales were up 23.5 percent from last October.

Every piece of housing data is scrutinized these days because it was primarily the housing market that derailed the U.S. economy, and its recovery is key to restoring economic vitality.

Low home prices, federal programs that helped push down interest rates and a temporary $8,000 federal tax credit mostly for first-time buyers have all played a role in boosting home sales in recent months. As sales picked up, the excess supply of homes started shrinking and prices began stabilizing.
Below is the non-seasonally adjusted October '09 figures vs those from October '08 (for some reason the seasonal adjustment multiplier was higher this October than last, resulted in an out-sized gain in the seasonally adjusted figure of 23.5% vs. 20.8% for the non-adjusted data). In looking deeper, we see the struggle the west coast continues to live through as the housing bubble continues to unwind.

The issue is the question of sustainability. Back to the Washington Post:
But real doubts linger about whether these gains can be maintained, especially if unemployment continues to rise and government intervention is curtailed. The federal "cash for clunkers" program boosted auto sales, for instance, but only temporarily. And many economists forecast weak growth once the government's broader economic stimulus spending winds down.