Reuters: Existing Home Sales Seen at Highest Since July 2007

November 20, 2009

Sales of existing U.S. homes likely rose for second consecutive month in October, reaching their highest level since July 2007, according to a Reuters poll, as buyers scrambled to take advantage of greater affordability and a first-time home buyer tax credit.

The survey of 29 economists predicted sales of previously owned homes climbed to a seasonally adjusted annual rate of 5.70 million, the fastest pace since 5.73 million units were sold in July 2007 and up from 5.57 million units in September.House

Forecasts, however, ranged widely, from as low as a seasonally adjusted annual rate of 5.26 million to as high as 6.00 million units.

Existing home sales have been on an upward trend for most of this year and an increase in October would mark the sixth gain in seven months. Home sales typically pick up in the spring as warmer weather boosts activity, but the momentum continued into most of the summer and fall.

Consumers have come out in droves to take advantage of the federal government’s $8,000 first-time home buyer tax credit — part of the stimulus bill — which was originally set to end November 30.

The Obama administration recently extended the $8,000 first-time home buyer tax credit, added a $6,500 credit for home owners buying a new residence and increased income limits. Eligible borrowers must sign contracts by April 30 and close by June 30.

The lowest mortgage rates in decades and high affordability have also helped the housing market find some footing after a three-year slump. Home price declines have been moderating in many regions of the country and in some areas they have risen.

Improvement in the housing market bodes well for the U.S. economy, as it points to better demand in the sector where the first signs of the recession took root. But with distressed properties making up a high proportion of sales, there is widespread uncertainty about the sector’s long-term outlook.

To be sure, there is still a huge supply of unsold homes on the market and millions of more foreclosures are in the pipeline, which should continue to pressure prices.

The economic outlook is also crucial for housing demand and many potential buyers are staying sidelined due to unemployment or fear of losing their jobs. The U.S. Labor Department said the unemployment rate reached a 26-1/2-year high of 10.2 percent in October. Access to credit also remains tight.

While existing home sales are predicted to rise in October, declines are expected in the months following. Recent data indicates a sector that is still on shaky ground. The Commerce Department said new U.S. housing starts in October unexpectedly fell to the lowest level in six months, dropping 10.6 percent.

Existing home sales tally the number of previously constructed homes for which a sale closed during the month.

The National Association of Realtors will release U.S. existing home sales data on Monday at 10 a.m. (1500 GMT).

Source: Reuters

Popularity: 5% [?]

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google Bookmarks
  • De.lirio.us
  • email
  • Live
  • Netvibes
  • Reddit
  • StumbleUpon
  • Taggly
  • Technorati
  • ThisNext
  • TwitThis
  • Yahoo! Buzz
  • YahooMyWeb
  • Blogsvine
  • LinkArena
  • LinkedIn
  • MySpace
  • Netvouz
  • Upnews
  • Webnews.de
  • Faves
  • FriendFeed
  • MSN Reporter
  • Twitter
  • Yahoo! Bookmarks

Written by djumper · Filed Under Real Estate Blog