US existing home sales rise for second month

December 20, 2018 3oliver

US homes sales remain sluggish last month, 7% below November 2017, while prices continued to rise (AFP Photo/Frederic J. BROWN)

Washington (AFP) – Sales of US existing homes rose unexpectedly in November, posting their second straight gain after an extended bout of weakness, according to an industry report on Wednesday.

The rebound could help ease concerns that the vital housing market has peaked.

However, sales remained sluggish and prices continued to rise while inventories shrank, the National Association of Realtors said.

Sales increased everywhere except in the fire-stricken West, where buying sentiment has weakened amid tight supply.

Sales of town homes, condos, co-ops and single-family houses, rose 1.9 percent to an annual rate of 5.3 million units after seasonal adjustment.

Economists had forecast a slight decrease to 5.2 million.

NAR Chief Economist Lawrence Yun said inventory pressures were easing, as the stock of available homes seems to be stabilizing, helping to slow price increases.

“The market conditions in November were mixed, with good signs of stabilizing home sales compared to recent months, though down significantly from one year ago,” he said in a statement.

Despite the increase compared to October, sales were still seven percent below November of last year.

Median prices posted a 4.2 percent gain year-on-year to $257,000, the 81st straight increase.

Inventories of homes for sale fell 5.9 percent from October to 1.74 million, but that still was an increase from 1.67 million units in November 2017.

At the current sales pace, this stock of homes on the market represented 3.9 months supply, down from 4.3 months in October but up from 3.5 a year ago.

Home sales and construction have fallen precipitously over the last year and economists say the housing sector is among the first to weaken once growth in the wider economy has peaked.

Rising materials costs and interest rates, reduced federal income tax deductions, and scarce labor have hammered the market since mid-2017.

Ian Shepherdson of Pantheon Macroeconomics said the market had been due for a short-term rebound, given a recent rise in mortgage applications, which should continue in the coming months.

“This will reduce excess inventory in the market and support prices but we don’t expect the revival to last beyond the spring, because we expect mortgage rates to rebound,” he wrote in a client note.

“Still, anything which interrupts the ‘housing is collapsing’ narrative is welcome because it isn’t.”