Tim McLaughlin, VP Weichert Financial Services
Sales of previously owned homes in the U.S. grew last month to the highest level in three years, putting the housing market on track to close out the year with its overall strongest sales since 2007.
Existing home sales increased 5.9% from a month earlier to a seasonally adjusted annual rate of 5.04 million, the National Association of Realtors said Thursday. It was the strongest month since November 2009, when buyers were rushing to close sales to qualify for a federal tax credit.
Sales in November were 14.5% above the same month a year earlier, and the previous month’s figures were revised downward to a reading of 4.76 million from an originally reported 4.79 million.
The results, the 17th consecutive month of year-over-year increases in home sales, surpassed analysts’ forecasts. Economists surveyed by Dow Jones Newswires had forecast sales would rise by 2.3% from the originally reported October figure to a pace of 4.90 million.
Lawrence Yun, the Realtors’ chief economist, said the housing market has been strongest at the higher end, with sales of homes above $750,000 rising by more than 50% from a year earlier. By contrast, sales of homes priced below $100,000 were down nearly 4% from a year ago, amid a shrinking supply of discounted foreclosures.
With home sales picking up, the number of homes on the market is falling. At the end of November the inventory of previously owned homes listed for sale contracted to 2.03 million. the lowest level since December 2001. That represented a 4.8-month supply at the current sales pace, the smallest supply since September 2005.
The housing market helped pulled the economy into the recession that started in December 2007 and was a drag on the early part of the recovery. However, it has contributed to growth for the past six quarters, adding 0.31 percentage point to the revised 3.1 growth rate in the July-September quarter, the Commerce Department said Thursday.
With the housing market climbing back, builders are getting more optimistic. The National Association of Home Builders said earlier in the week that its housing market index rose to the strongest reading since April 2006.