From the WSJ Developments Blog:
Here’s a reason for America’s real-estate agents to start celebrating Thanksgiving a few days early: Sales of previously owned homes in the U.S. — the biggest part of the market — unexpectedly climbed in October.
As we report, existing-home sales ticked up 1.4% from a month earlier, the National Association of Realtors trade group reports. Sales rose in the West, South and Midwest, but fell in the Northeast, which may have been slowed by an early-season snowstorm.
Economists surveyed by Dow Jones Newswires had expected home sales to fall by 2.2%.
While beating expectations is a good thing — and the hard-hit housing market could be near a bottom — demand remains weak because of the limping economy, elevated unemployment and tight lending standards that are preventing many would-be buyers from securing mortgage funding.
Plenty of consumers are also afraid that home prices, down 30% or more from the peak, aren’t done falling. And it doesn’t look like they are: October’s median sales price was $162,500, down 4.7% from $170,600 a year earlier.
Paul Diggle, economist, Capital Economics: “The modest rise in existing home sales in October may reflect the recent improvements in economic activity and the labor market. But a sustained and significant recovery in home sales is just not on the cards when large numbers of potential buyers are constrained by negative equity and tight credit conditions.”
Joshua Shapiro, economist, MFR: “Inventories are high relative to sales rates, and would be even more so if all those wishing to sell their home actually had the house on the market instead of keeping it off in the face of eroding prices.”
Ellen Zentner, economist, Nomura: “Despite more job gains this year, affordability remaining near record highs, and rising rents generally steering renters to buying, home sales have been unable to break out of a narrow range. Programs such as bulk sales to investors and speeding the process of foreclosure would go far in dispensing of the incredible overhang of REO properties.”
Sales of previously owned homes in the U.S. unexpectedly rose in October, a sign falling prices may be attracting buyers.
Purchases increased 1.4 percent to a 4.97 million annual rate, the National Association of Realtors said today in Washington. The median forecast of 75 economists surveyed by Bloomberg News was for a 4.8 million rate. The median house price dropped 4.7 percent from a year earlier, and the number of properties for sale was the lowest for any October since 2005.
Borrowing costs near a record low are helping homebuyers take advantage of housing that’s growing more affordable as prices drop. At the same time, the end of a temporary halt on foreclosures may push more properties onto the market, triggering further slides in value that may prevent the industry from recovering for years.
“The housing market is stabilizing, but it has a long road to a full recovery,” said Sal Guatieri, a senior U.S. economist at BMO Capital Markets in Toronto. “There are still a lot of depressed properties in the pipeline that will hit the market, and demand likely needs to strengthen above a 5 million annual rate to absorb the overhang of unsold homes and alleviate the downward pressure on prices.”