Existing Home Sales

(12-22-10 Release)

                               Nov    Oct   Sep    Aug     Jul     Jun     May     Apr

Total  EHS             4.68   4.43   4.53   4.12   3.84   5.26   5.66    5.79

Months’ Supply      9.5    10.5    10.6   12.0    12.5    8.9     8.3      8.4

 Source: National Association of Realtors; 2010; annualized, seasonally adjusted.

 Highlights

• Existing home sales rose 5.6 percent to 4.68 annualized units in November from a month earlier.
• November existing home sales pace is 27.9 percent below the pace of a year ago but the year ago number’s were highly biased upward due to the homebuyer tax credit program.
• The months’ supply fell to 9.5 in November from 10.5 in October.
• The median existing-home price increased 0.4% on a year-ago basis.

 Analysis

The relatively healthy monthly rise in existing home sales reinforces the outlook for housing demand in light of the temporary setbacks in foreclosure proceedings. The resale market also experienced a meaningful drop in the inventory of homes available for sale, reflecting the postponements due to the moratoriums on foreclosure proceedings.  However, the drop in inventory will prove temporary when the moratoria are lifted.

Looking ahead, home sales are expected to post modest gains throughout the year. The key drivers of housing demand: jobs, income and confidence, are not expected to break out of last year’s funk anytime soon. And a homebuyer tax credit is not in the offing this year to provide a temporary boost in housing demand like it did in the first half of 2010.

2011 will likely be an improvement over last year, but a full recovery in housing is not in the cards. A less than stellar economy combined with an excessive amount of distressed sales and depressed home values will keep a full fledged recovery at bay.

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