Home sales hint at recovery after deep slump
WASHINGTON (Reuters) - Homes sales surged in November, adding to hints of recovery, but revisions to data for the last four years showed the housing recession was much deeper than previously thought.
The National Association of Realtors said on Wednesday that sales of previously owned homes increased 4 percent from October to an annual rate of 4.42 million units.
At November's sales pace, the 2.58 million unsold homes on the market represented a 7.0 month's supply, the lowest since February 2007 and a sign a backlog of inventory that has been weighing on the market was slowly clearing.
The rise in sales and drop in inventory was the latest sign the housing sector, which triggered the 2007-09 recession, was on the cusp of a recovery. Data on Tuesday showed housing starts scaled a 1-1/2 year high in November.
"The housing market is finding its bottom, and that will translate into more growth in GDP and less of a drag on consumer confidence," said Robert Dye, chief economist at Comerica in Dallas. "But we still have a long, long way to go."
The Realtors group also said it had overstated home sales from 2007 to 2010 by 14.3 percent. It said sales bottomed at a 3.30 million-unit pace in July 2010, rather than 3.86 million, underscoring the depth of the housing market downturn.
The industry group said sales over that four-year period averaged 4.42 million units a year compared with the previous estimate was 5.16 million units.
It blamed double-counting of properties and geographic population shifts, among other reasons, for the revsions.
"Some property listings on more than one multiple listing service, and issues related to flipping, also contributed to the downward revisions," said Lawrence Yun, NAR chief economist.
NO WAY BUT UP
A housing recovery could help underpin what already appears to be a broader quickening of U.S. economic growth. During normal times, economists estimate that one out of every eight jobs in the economy is generated by housing-related activity.
While the U.S. economy appears to be gathering strength, the global backdrop remains troubling with much of the rest of the world slowing down and Europe sliding into an almost certain recession.
Oracle Corp , the world's No. 3 software maker, reported results that disappointed Wall Street on Wednesday, joining a list of U.S. technology heavweights, including Hewlett-Packard Co , Intel Corp and Texas Instruments , whose results and earnings have raised alarm bells on the outlook.
In addition, lawmakers have yet to break an impasse over extending a payroll tax cut for 160 million U.S. workers, which expires at year end. Economists have warned a failure to keep the tax break in place could hit the economy hard.
While the inventory of unsold home fell in November, market conditions are still troubled. A supply of between six and seven months is generally considered ideal, with higher readings pointing to lower house prices.
The median sales price rose 2.1 percent from October, but was still down 3.5 percent from a year ago at $164,200. Given the glut of foreclosed properties hitting the market, analysts believe prices will remain under pressure for months to come.
A separate report showed applications for U.S. home mortgages slipped 2.6 percent last week, with both refinancing and home purchase demand falling. Mortgage demand had risen sharply earlier this month on a wave of refinancing activity.
(Additional reporting by Leah Schnurr in New York; Writing by Lucia Mutikani and Tim Ahmann; Editing by Neil Stempleman)