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Economy in Brief

U.S. Existing Home Sales Surge To Highest Since 2007 As Prices Fall Again
by Tom Moeller November 23, 2009

Improved affordability is a great help when buying a home. The National Association of Realtors reported that October sales of existing homes rose sharply to the highest level since July 2007. The 10.1% m/m increase to 6.100M units (SAAR) followed an 8.8% rise during September and it raised sales to the highest level since February 2007. Moreover, sales were up by more than one-third from the January low. The gain in October home sales outpaced Consensus expectations for a rise to 5.70M. Total sales include sales of condos and co-ops.

Sales of existing single-family homes alone increased a sharp 9.7% to 5.330M (21.4% y/y) last month and were up 20.7% from the January low. (These data have a longer history than the total sales series). Sales of condos and co-ops rose 13.2% and were up by nearly one-half from last October.

Sales have been helped by a recently extended tax credit for first-time home buyers. The credit of up to $8,000 runs though early next year. The full details of the home-buyer tax credit can be found here.

The median price of all existing homes fell for the fourth straight month, to $173,100. Though prices were still lower than the year-ago level, they have risen 5.0% from the January low. The median price for a single-family home alone fell to $173,100 (-6.8% y/y). These price declines have sharply raised home affordability. During September the composite index of home affordability rose again and was up 18.2% from the year ago level.

The number of unsold homes (condos & single-family) for sale fell 3.7% (-14.9% y/y) during October fell to the lowest level since January 2007. At the current sales rate there was a 7.0 months' supply of homes on the market which was nearly the lowest since early-2007. The latest figure was down from a high of 11.3 months early last year. For single-family homes, the inventory fell 3.2% m/m (-14.3% y/y). At the current sales rate there was a 6.8 month's supply of single-family homes on the market, the lowest since early-2007.

The data on existing home sales, prices and affordability can be found in Haver's USECON database. The regional price, affordability and inventory data is available in the REALTOR database.

Preventing a Repeat of the Money Market Meltdown of the Early-1930s from the Federal Reserve Bank of Dallas can be found here

Existing Home Sales (Thous, SAAR) October September August Oct. Y/Y 2008 2007 2006
Total 6,100 5,540 5,090 23.5% 4,893 5,674 6,516
  Northeast 1,060 950 910 27.7 845 1,010 1,093
  Midwest 1,430 1,250 1,140 28.8 1,130 1,331 1,494
  South 2,300 2,040 1,890 25.7 1,860 2,243 2,577
  West 1,310 1,290 1,150 12.0 1,064 1,095 1,357
Single-Family 5,330 4,860 4,470 21.4 4,341 4,960 5,712
Median Price, Total, $ 173,100 176,000 177,300 -7.1 197,250 216,633 222,042
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