Existing-home sales continued to recover last month following a rise in October, while the median price of existing homes sold headed downward, according to a widely anticipated report released today by the National Association of Realtors. The increase in existing home sales comes after the Commerce Department reported yesterday that new home sales also rose during November. Total existing-home sales â€“ including single-family, townhomes, condominiums and co-ops â€“ rose 0.6 percent to a seasonally adjusted annual rate of 6.28 million units in November from a level of 6.24 million in October, but were 10.7 percent below the 7.03 million-unit pace in November 2005. David Lereah, NAR’s chief economist, said modest gains are expected for home sales. â€œAs the housing market recovers from its correction, existing-home sales should be rising gradually during 2007 â€“ it looks like we may have reached the low point for the current cycle in September,â€? he said. â€œWe’ve entered a more sustainable period of home sales now, and we expect greater support for prices over time as inventory levels are eventually drawn down.â€? Total housing inventory levels fell 1.0 percent at the end of November to 3.82 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace.
The national median existing home price for all housing types was $218,000 in November, according to the report, 3.1 percent lower than at this time last year. The median is a typical market price where half of the homes sold for more and half sold for less. â€œFor every 1.0 percent drop in home prices, we project an additional 50,000 buyers are drawn into the market,â€? Lereah said. The increase in sales exceeded economists’ expectations, which had forecase a drop in sales. Estimates of the annual rate of resales ranged from 5.99 million to 6.31 million, according to a Bloomberg survey of economists. Sales of existing homes, which account for about 85 percent of the U.S. housing market, are recorded when a contract is closed. New home sales, recorded when a contract is signed, are considered a more timely barometer of the housing market. A Commerce Department report yesterday showed new home sales rose 3.4 percent during November to an annual sales pace of 1.047 million, following a rate of 1.013 million the prior month. The supply of unsold homes at the current sales rate fell to the lowest since May. The new home sales report led many analysts to suggest that the worst of the housing downturn was in the past, and pushed the Dow Jones Industial Average up more than 100 points, closing above 12,500 for the first time in index history.