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Economy in Brief

Existing Home Sales Also Up in November; Prices Are Down Slightly, but Supply Overhang Shrinks a Bit as Market Conditions Show Some Improvement
by Carol Stone* December 28, 2006

After existing home sales had increased modestly in October, economists looked for them to retreat in November by about half of their October rise. Instead, the National Association of Realtors reported this morning, these home sales increased further. It's a mild gain of just 0.6%, following October's 0.5% and these sales are still more than 11% lower than year-ago volume. But as with the new home sales report yesterday, the unexpected move suggests that the housing market may well be stabilizing. Sales of single-family homes inched ahead 0.2%, and October volume was revised slightly higher to a 1.5% rise from 1.3% reported initially.

By region, sales rose 6.0% in the Northeast and 0.8% in the West. They were flat in the Midwest and continued to fall in the South, this time by 1.6%.

Home prices fell by 0.5% for all existing home sales and by 1.1% for single-family houses alone. October's prices for total sales were revised down, so they now show a mild decline then and four monthly decreases running. Notably, though, prices in the Northeast and in the West both had good increases, 5.1% and 2.6%, respectively.

The inventory of "homes on the market" fell by 1.0%, renewing the slight downtrend that had begun in August, after a 2.0% rise in October. At current sales rates, it now amounts to 7.3 months' of sales, just below October's 7.4 months.

The entire housing market, new and existing, experienced rising sales in November. These increases were small but unexpected. Inventories of unsold homes also fell in both market segments, improving the underlying condition of the markets. We don't want to make too much of these developments, but they are encouraging. Support from more moderate interest rates, flexible pricing and lower energy prices all surely helps.

The broad aggregate data on existing home sales are included in Haver's USECON database; details about prices by region and inventories are available in the REALTOR database.

Existing Home Sales (SAAR, 000s) Nov 2006 Oct 2006 Sept 2006 Year/ Year 2005 2004 2003
Total Sales 6,280 6,240 6,210 -11.1% 7,074 6,782 6,176
Single-Family Sales 5,520 5,510 5,430 -11.5% 6,178 5,962 5,444
Median Single-Family Home Price (NSA,000s) $217.2 $219.6 $221.1 -3.6% $217.5 $192.8 $178.3
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