Home sales rate up again

Houses previously owned sold better in Nov. than Oct.

December 29, 2006|By New York Times News Service

The sales rate for previously owned homes rose in November for the second consecutive month, an industry group said yesterday, as homeowners eager to unload their properties in a crowded market cut their prices.

Also, a pair of economic reports suggested that the economy outside of housing is on sturdy footing. The Conference Board's index of consumer confidence rose this month to the highest level since April. And a report on business activity in the Midwest showed an increase this month, according to the National Association of Purchasing Management-Chicago.

The housing industry group, the National Association of Realtors, reported that sales of existing homes increased 0.6 percent over October, to a seasonally adjusted annual rate of 6.28 million. The September figure was 6.21 million. But sales remained significantly behind last year's levels, falling 10.7 percent from November last year.

The median price, midpoint of prices for homes sold, dropped to $218,000 last month, down 3.1 percent from a year earlier.

Economists said falling prices - November was the fourth-consecutive month in which the price of a previously owned home declined year over year - were starting to draw back buyers who had been wary after years of double-digit home price increases.

In the Baltimore area, sales of homes sold through the multiple listing service fell 12.91 percent from a year earlier, the smallest decline since February, according to data released this month by Metropolitan Regional Information Systems Inc. of Rockville. Compared with the previous month, sales slid 2.7 percent.

Prices in the region showed a slight increase, to an average of $309,753 last month from $309,291 in November last year

"Prices coming down are bringing people back to the marketplace," said David Lereah, chief economist of the Realtors association. "That's bad news for people who own houses, but it's working."

While recent signs have led some economists to speculate that the worst of the housing slump has passed, many, including those at the Realtors association, are taking a wait-and-see approach.

"Maybe we've hit bottom," Lereah said. "I'll need another month before I can get comfortable with that statement."

Still, the back-to-back monthly increases in sales of previously owned homes, coupled with a report Wednesday showing a rise in sales of new homes last month, suggests to some economists that the housing decline is starting to stabilize.

Gary Bigg, an economist with Bank of America, said in a research note that the housing reports from this week suggest "that housing demand has firmed, albeit at a lower level than in 2005."

The upturn last month in sales of previously owned homes was largely a result of a 6 percent rise in the Northeast that offset flat sales in the Midwest and a 1.6 percent decline in the South. Sales in the West rose 0.8 percent.

In the months ahead, selling off the huge supply of unsold homes will be crucial to determining whether the housing market will rebound, analysts said.

In November, the time it would take to sell all the existing homes on the market fell to 7.3 months, down from 7.4 months in October. The October number represented the biggest backlog of single-family homes since May 1993.

"We still need to clear a huge amount of inventory," said David Kelly, economist with Putnam Investments.

While a dip in residential construction lopped more than 1 percentage point off the gross domestic product in the third quarter, strength in other areas prevented the housing slowdown from becoming too much of a drag.

"The encouraging sign is that the rest of the economy is OK," Kelly said. "And we're really running out of time for housing to hurt the rest of the economy."

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