Sales of existing homes in the U.S. rose 5.9% from October to November to an annual rate of 5.04 million—the highest level since 2009—thanks to near-record-low interest rates. The results exceeded the 3% gain anticipated by economists, according to a Bloomberg survey. Sales volume for high-end homes (above $750,000) led the increase, rising 50% from the prior year, while homes priced under $100,000 fell 4% due to fewer discounted foreclosures, according to the National Association of Realtors. Importantly, inventory has been reduced to levels not seen since 2005. The inventory of previously-owned homes offered for sale fell 20% from a year ago to 2.03 million which implies a 4.8 month supply. With fewer homes on the market, prices are getting a boost. The median sales price in November was $180,600, a 10.1% increase from $164,000 a year ago. This marks the ninth consecutive month
of year-over-year gains. To be sure, home sales, prices, and new construction are nowhere near levels seen six years ago. While low interest rates are helping draw buyers back to the market, unemployment remains stubbornly high and wage growth is anemic. Moreover, it’s still tough to get a loan, although some of this pressure seems to be abating as evidenced by strong auto sales, both new and used. Nonetheless, many economists are optimistic the housing recovery will continue into 2013, possibly providing some relief to headwinds created by the so-called “fiscal cliff” of spending cuts and higher taxes. As a sweetener, the Federal Reserve is committed to keeping interest rates low at least until the unemployment rate drops to 6.5%, a level last witnessed in 2008. Summing up, housing remains one of the few bright spots in an otherwise sluggish US economy.
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