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Existing home sales edge up in November

Existing home sales edge up in November

Sales of previously owned homes in the U.S. inched up in November but that did not change the overall bleak picture for an ailing housing industry that has been suffering through a painful slump.
The National Association of Realtors reported Monday that sales of existing single-family homes, condominiums and townhouses rose 0.4 percent in November from October, to a seasonally adjusted annual rate of 5 million units. Over the last 12 months, however, existing home sales have plunged 20 percent, underscoring the troubles in the housing sector.
Economists were calling for sales to either move up slightly or hold steady for November.
Home prices continued to sink.
The median price of a home sold last month was $210,200 (euro142,789). That marked a 3.3 percent drop from a year ago. It was the fifth biggest annual decline on record. The median price is where half sell for more and half sell for less.
Sales were mixed across different regions of the country.
Existing home sales jumped 10.3 percent in November from October in the West. They were flat in the Midwest. However, they fell by 2 percent in the South and by 3.3 percent in the Northeast.
The inventory of unsold homes in November was 4.27 million homes. At the current sales pace it would take 10.3 months to exhaust that overhang.
"Inventory is still high and further reduction in prices may be required in some areas to induce buyers back into the market," said the association's chief economist, Lawrence Yun.
A dip in 30-year mortgage rates in November probably helped give nationwide existing home sales the small boost last month, the association suggested. Yun thought the small increase could be taken as a sign that the market might be stabilizing. That said, previous signs of stabilization earlier in the year have been dashed. A credit crunch which took a turn for the worse in the summer has aggravated housing problems.
The housing market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. Sales turned weak as did home prices. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.
Foreclosures have soared to record highs and probably will keep rising. A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Other home buyers were clobbered as low introductory rates on their mortgages jumped to much higher rates, which they couldn't afford.
Problems in housing are expected to persist well into 2008 _ a major election year.
The housing and mortgage meltdowns have raised the odds that the U.S. will fall into a recession. And, the situation has given Democrats and Republicans_ including those who want to be the next president _ plenty of opportunities to spread blame around.
The economy's growth is expected to have slowed sharply to a pace of just 1.5 percent or less in the final three months of this year. Former Federal Reserve Chairman Alan Greenspan recently warned that the economy is "getting close to stall speed." The big worry is that housing and credit troubles will force individuals to cut back on spending and businesses to cut back on hiring and capital investment, throwing the economy into a tailspin.
To help bolster the economy, the Federal Reserve has sliced a key interest rate three times this year. Its latest rate cut, on Dec. 11, dropped the Fed's key rate to 4.25 percent, a two-year low. Many economists are predicting the Fed will lower rates again when it meets in late January.
On Friday the government reported that new-home sales plunged by 9 percent in November to a pace of 647,000, the lowest in more than 12 years.
The new-home numbers are thought to give a more current account of the health of the housing market because they are recorded when a contract is signed. The existing home figures lag behind because they are based on contract closings, many of which reflect deals negotiated months earlier.


Updated : 2021-03-01 13:07 GMT+08:00