By Lucia Mutikani
WASHINGTON, Nov 23 (Reuters) - Sales of previously owned U.S. homes jumped last month to their highest level in more than 2-1/2 years, but a fall in an economic activity gauge was a reminder recovery from recession would be patchy.
The National Association of Realtors said on Monday sales of existing home sales surged a record 10.1 percent month-over-month to an annual rate of 6.10 million units as buyers rushed to take advantage of a popular tax credit for first-time buyers that had been scheduled to end this month.
It was the highest since February 2007 and beat market expectations for a 5.70 million-unit pace. Sales in September were at a 5.54 million-unit rate.
'Although the data are biased higher from policy measures, we do believe this sharp gain signals pent up demand and a willingness to purchase homes, which is a good sign for the sustainability of the housing recovery,' said Michelle Meyer, an economist at Barclays Capital in New York.
Graphic on existing home sales and new construction: http://graphics.thomsonreuters.com/119/US_EXHOMS1109.gif
U.S. stock indexes extended gains on the housing data, which shifted attention away from an earlier report from the
Federal Reserve Bank of Chicago showing its National Activity Index slid to -1.08 from -1.01 in September.
U.S. Treasury debt prices eased as the market prepared for another huge dose of supply this week.
The National Activity Index's three-month moving average, CFNAI-MA3, decreased to -0.91 in October from -0.67 in September, declining for the first time in 2009.
According to the Chicago Fed, a move below -0.70 in the three-month moving average following a period of economic expansion indicates an increasing likelihood a recession has begun.
This development will likely feed into fears the economic recovery that started in the third quarter may lose some momentum once government stimulus wanes, given high unemployment which is crimping consumer spending.
Analysts are cautiously hoping a sustained housing market recovery will help improve the psychology of households, which has been shaken by an unemployment rate of 10.2 percent, the highest in 26-1/2 years.
EXISTING HOME SALES BOTTOMED
The NAR said data on Monday, which showed broad-based gains in the largest segment of the housing market, was proof that the decline in purchases of existing homes had bottomed.
'Home prices are almost there. We are seeing a less of a decline in house values,' said Lawrence Yun, NAR's chief economist.
'Many buyers have been rushing to beat the deadline for first-time buyer credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November.'
Distressed transactions accounted for 30 percent of sales last month and continued to weigh on house prices. First-time buyers made up a third of sales in October.
The national median home price fell 7.1 percent from October last year, the smallest decline in over a year, to $173,100. Homes in foreclosure typically sell for 15 to 20 percent less than traditional homes.
The housing market is slowly mending after a three-year decline, which contributed to tipping the U.S. economy into its worst recession in seven decades. Housing construction contributed to economic growth in the third quarter for the first time since 2005.
Recovery is being supported by the $8,000 tax credit for first-time buyers, low mortgage rates and falling house prices. The government this month extended the incentive into next year and added a $6,500 credit for home owners buying a new residence. It had been due to expire on Nov. 30.
Purchases by the U.S. Federal Reserve of mortgage-related assets have helped to push home loans down, boosting the affordability of house and aiding the sector's recovery.
On Sunday, St. Louis Federal Reserve Bank President James Bullard said the U.S. central bank should keep its mortgage-related asset purchase program beyond a scheduled expiration in March.
The Fed, which cut interest rates to near zero last December, has committed to keep borrowing costs ultra low for an extended period of time.
In October, sales of single-family homes -- the biggest segment of the market -- rose 9.7 percent to an annual rate of 5.33 million units. Condominium and co-ops increased 13.2 percent to a 770,000-unit rate.
Sales were up in all four regions of the country. Prices rose 1.1 percent in the Midwest, which didn't see the same boom as the rest of the country. They declined in the other three. The rise in the Midwest was the first price increase in any region since November 2008.
The inventory of existing homes for sale in October fell 3.7 percent to 3.57 million units from the previous month, NAR said. At October's sales pace, that represented a supply of 7.0 months, the lowest in 2-1/2 years, from September's revised 8.0 months.
For a graphic on existing home sales click on: http://graphics.thomsonreuters.com/119/US_EXHOMS1109.gif
(Additional reporting by Corbett B. Daly in Washington, Burton Frierson and Julie Haviv in New York; Editing by Andrew Hay)
((lucia.mutikani@thomsonreuters.com: Tel: 202 898 8315; Reuters messaging: lucia.mutikani.reuters.com@reuters.net))
((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: USA ECONOMY/
* U.S. existing home sales scale 2-1/2-year high in Oct.
* Home price drop slows, inventories lowest in 2-1/2 years
* Chicago Fed's national activity gauge slips in October
(Adds details, updates markets)
By Lucia Mutikani
WASHINGTON, Nov 23 (Reuters) - Sales of previously owned U.S. homes jumped last month to their highest level in more than 2-1/2 years, but a fall in an economic gauge was a reminder that recovery from recession would be patchy.
Sales of existing home sales surged a record 10.1 percent month-over-month in October to an annual rate of 6.10 million units, the National Association of Realtors said on Monday, as buyers rushed to take advantage of a popular tax credit for first-time buyers that had been scheduled to end this month.
It was the highest sales pace since February 2007 and beat market expectations for a 5.70 million-unit pace. Sales in September were at a 5.54 million-unit rate.
'Although the data are biased higher from policy measures, we do believe this sharp gain signals pent-up demand and a willingness to purchase homes, which is a good sign for the sustainability of the housing recovery,' said Michelle Meyer, an economist at Barclays Capital in New York.
Graphic on existing home sales and new construction: http://graphics.thomsonreuters.com/119/US_EXHOMS1109.gif
U.S. stocks rallied on the housing data, which eclipsed a report from the Federal Reserve Bank of Chicago showing its National Activity Index, a measure of the economy, slid to -1.08 from -1.01 in September.
The Standard & Poor's 500 Index was on track to break a three-day sell-off.
The National Activity Index's three-month moving average, CFNAI-MA3, decreased to -0.91 in October from -0.67 in September, declining for the first time in 2009.
According to the Chicago Fed, a move below -0.70 in the three-month moving average following a period of economic expansion indicates an increasing likelihood a recession has begun.
This development will likely feed into fears the economic recovery that started in the third quarter may lose some momentum once government stimulus wanes, given the high unemployment that is crimping consumer spending.
Analysts are cautiously hoping a sustained housing market recovery will help improve the psychology of households, which has been shaken by an unemployment rate of 10.2 percent, the highest in 26-1/2 years.
EXISTING HOME SALES BOTTOMED
The Realtors group said its data on Monday, which showed broad-based gains in the largest segment of the housing market, was proof that the decline in purchases of existing homes had bottomed.
'Home prices are almost there. We are seeing less of a decline in house values,' said Lawrence Yun, NAR's chief economist. He said the Realtors group expected strong sales for November, related to the federal tax credit.
Analysts, however, cautioned of some slowdown in the sales pace, citing a drop to 12-year lows in demand for home loans during the week ended Nov. 13.
Distressed transactions accounted for 30 percent of sales last month and continued to weigh on home prices. First-time buyers made up a third of sales in October. A separate survey based on actual home sales showed first-time home owners accounted for 47 percent of sales last month.
The national median home price fell 7.1 percent from October last year, the smallest decline in over a year, to $173,100. Homes in foreclosure typically sell for 15 to 20 percent less than other homes.
The housing market is slowly mending after a three-year decline, which helped tip the U.S. economy into its worst recession in seven decades. Housing construction contributed to economic growth in the third quarter for the first time since 2005.
Recovery is being supported by the $8,000 tax credit for first-time buyers, low mortgage rates and falling house prices. The government this month extended the home buyers' incentive into next year and added a $6,500 credit for home owners buying a new residence. It had been due to expire on Nov. 30.
Purchases by the U.S. Federal Reserve of mortgage-related assets have helped to push home loans down, boosting the affordability of house and aiding the sector's recovery.
On Sunday, the president of the St. Louis Federal Reserve Bank, James Bullard, said the U.S. central bank should keep its mortgage-related asset purchase program beyond a scheduled expiration in March.
The Fed, which cut interest rates to near zero last December, has committed to keep borrowing costs ultra low for an extended period of time.
In October, sales of single-family homes -- the biggest segment of the market -- rose 9.7 percent, while condominium and co-ops increased 13.2 percent. Sales were up in all four regions of the country. Prices rose in the Midwest, which had not seen the same boom as the rest of the country.
Prices declined in the other three regions. The rise in the Midwest was the first gain in any region since November 2008.
The inventory of existing homes for sale in October fell to 3.57 million units from the previous month, NAR said. At October's sales pace, that represented a supply of seven months, the lowest in 2-1/2 years, from September's eight months.
The inventory of homes on the market must fall below six months' supply for there to be a balance between buyers and sellers, analysts say.
For a graphic on existing home sales click on: http://graphics.thomsonreuters.com/119/US_EXHOMS1109.gif
(Additional reporting by Corbett B. Daly in Washington, Burton Frierson and Julie Haviv in New York; Editing by Leslie Adler)
((lucia.mutikani@thomsonreuters.com: Tel: 202 898 8315; Reuters messaging: lucia.mutikani.reuters.com@reuters.net)) Keywords: USA ECONOMY/ (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WASHINGTON, Nov 23 (Reuters) - Sales of previously owned U.S. homes jumped last month to their highest level in more than 2-1/2 years, but a fall in an economic activity gauge was a reminder recovery from recession would be patchy.
The National Association of Realtors said on Monday sales of existing home sales surged a record 10.1 percent month-over-month to an annual rate of 6.10 million units as buyers rushed to take advantage of a popular tax credit for first-time buyers that had been scheduled to end this month.
It was the highest since February 2007 and beat market expectations for a 5.70 million-unit pace. Sales in September were at a 5.54 million-unit rate.
'Although the data are biased higher from policy measures, we do believe this sharp gain signals pent up demand and a willingness to purchase homes, which is a good sign for the sustainability of the housing recovery,' said Michelle Meyer, an economist at Barclays Capital in New York.
Graphic on existing home sales and new construction: http://graphics.thomsonreuters.com/119/US_EXHOMS1109.gif
U.S. stock indexes extended gains on the housing data, which shifted attention away from an earlier report from the
Federal Reserve Bank of Chicago showing its National Activity Index slid to -1.08 from -1.01 in September.
U.S. Treasury debt prices eased as the market prepared for another huge dose of supply this week.
The National Activity Index's three-month moving average, CFNAI-MA3, decreased to -0.91 in October from -0.67 in September, declining for the first time in 2009.
According to the Chicago Fed, a move below -0.70 in the three-month moving average following a period of economic expansion indicates an increasing likelihood a recession has begun.
This development will likely feed into fears the economic recovery that started in the third quarter may lose some momentum once government stimulus wanes, given high unemployment which is crimping consumer spending.
Analysts are cautiously hoping a sustained housing market recovery will help improve the psychology of households, which has been shaken by an unemployment rate of 10.2 percent, the highest in 26-1/2 years.
EXISTING HOME SALES BOTTOMED
The NAR said data on Monday, which showed broad-based gains in the largest segment of the housing market, was proof that the decline in purchases of existing homes had bottomed.
'Home prices are almost there. We are seeing a less of a decline in house values,' said Lawrence Yun, NAR's chief economist.
'Many buyers have been rushing to beat the deadline for first-time buyer credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November.'
Distressed transactions accounted for 30 percent of sales last month and continued to weigh on house prices. First-time buyers made up a third of sales in October.
The national median home price fell 7.1 percent from October last year, the smallest decline in over a year, to $173,100. Homes in foreclosure typically sell for 15 to 20 percent less than traditional homes.
The housing market is slowly mending after a three-year decline, which contributed to tipping the U.S. economy into its worst recession in seven decades. Housing construction contributed to economic growth in the third quarter for the first time since 2005.
Recovery is being supported by the $8,000 tax credit for first-time buyers, low mortgage rates and falling house prices. The government this month extended the incentive into next year and added a $6,500 credit for home owners buying a new residence. It had been due to expire on Nov. 30.
Purchases by the U.S. Federal Reserve of mortgage-related assets have helped to push home loans down, boosting the affordability of house and aiding the sector's recovery.
On Sunday, St. Louis Federal Reserve Bank President James Bullard said the U.S. central bank should keep its mortgage-related asset purchase program beyond a scheduled expiration in March.
The Fed, which cut interest rates to near zero last December, has committed to keep borrowing costs ultra low for an extended period of time.
In October, sales of single-family homes -- the biggest segment of the market -- rose 9.7 percent to an annual rate of 5.33 million units. Condominium and co-ops increased 13.2 percent to a 770,000-unit rate.
Sales were up in all four regions of the country. Prices rose 1.1 percent in the Midwest, which didn't see the same boom as the rest of the country. They declined in the other three. The rise in the Midwest was the first price increase in any region since November 2008.
The inventory of existing homes for sale in October fell 3.7 percent to 3.57 million units from the previous month, NAR said. At October's sales pace, that represented a supply of 7.0 months, the lowest in 2-1/2 years, from September's revised 8.0 months.
For a graphic on existing home sales click on: http://graphics.thomsonreuters.com/119/US_EXHOMS1109.gif
(Additional reporting by Corbett B. Daly in Washington, Burton Frierson and Julie Haviv in New York; Editing by Andrew Hay)
((lucia.mutikani@thomsonreuters.com: Tel: 202 898 8315; Reuters messaging: lucia.mutikani.reuters.com@reuters.net))
((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: USA ECONOMY/
* U.S. existing home sales scale 2-1/2-year high in Oct.
* Home price drop slows, inventories lowest in 2-1/2 years
* Chicago Fed's national activity gauge slips in October
(Adds details, updates markets)
By Lucia Mutikani
WASHINGTON, Nov 23 (Reuters) - Sales of previously owned U.S. homes jumped last month to their highest level in more than 2-1/2 years, but a fall in an economic gauge was a reminder that recovery from recession would be patchy.
Sales of existing home sales surged a record 10.1 percent month-over-month in October to an annual rate of 6.10 million units, the National Association of Realtors said on Monday, as buyers rushed to take advantage of a popular tax credit for first-time buyers that had been scheduled to end this month.
It was the highest sales pace since February 2007 and beat market expectations for a 5.70 million-unit pace. Sales in September were at a 5.54 million-unit rate.
'Although the data are biased higher from policy measures, we do believe this sharp gain signals pent-up demand and a willingness to purchase homes, which is a good sign for the sustainability of the housing recovery,' said Michelle Meyer, an economist at Barclays Capital in New York.
Graphic on existing home sales and new construction: http://graphics.thomsonreuters.com/119/US_EXHOMS1109.gif
U.S. stocks rallied on the housing data, which eclipsed a report from the Federal Reserve Bank of Chicago showing its National Activity Index, a measure of the economy, slid to -1.08 from -1.01 in September.
The Standard & Poor's 500 Index was on track to break a three-day sell-off.
The National Activity Index's three-month moving average, CFNAI-MA3, decreased to -0.91 in October from -0.67 in September, declining for the first time in 2009.
According to the Chicago Fed, a move below -0.70 in the three-month moving average following a period of economic expansion indicates an increasing likelihood a recession has begun.
This development will likely feed into fears the economic recovery that started in the third quarter may lose some momentum once government stimulus wanes, given the high unemployment that is crimping consumer spending.
Analysts are cautiously hoping a sustained housing market recovery will help improve the psychology of households, which has been shaken by an unemployment rate of 10.2 percent, the highest in 26-1/2 years.
EXISTING HOME SALES BOTTOMED
The Realtors group said its data on Monday, which showed broad-based gains in the largest segment of the housing market, was proof that the decline in purchases of existing homes had bottomed.
'Home prices are almost there. We are seeing less of a decline in house values,' said Lawrence Yun, NAR's chief economist. He said the Realtors group expected strong sales for November, related to the federal tax credit.
Analysts, however, cautioned of some slowdown in the sales pace, citing a drop to 12-year lows in demand for home loans during the week ended Nov. 13.
Distressed transactions accounted for 30 percent of sales last month and continued to weigh on home prices. First-time buyers made up a third of sales in October. A separate survey based on actual home sales showed first-time home owners accounted for 47 percent of sales last month.
The national median home price fell 7.1 percent from October last year, the smallest decline in over a year, to $173,100. Homes in foreclosure typically sell for 15 to 20 percent less than other homes.
The housing market is slowly mending after a three-year decline, which helped tip the U.S. economy into its worst recession in seven decades. Housing construction contributed to economic growth in the third quarter for the first time since 2005.
Recovery is being supported by the $8,000 tax credit for first-time buyers, low mortgage rates and falling house prices. The government this month extended the home buyers' incentive into next year and added a $6,500 credit for home owners buying a new residence. It had been due to expire on Nov. 30.
Purchases by the U.S. Federal Reserve of mortgage-related assets have helped to push home loans down, boosting the affordability of house and aiding the sector's recovery.
On Sunday, the president of the St. Louis Federal Reserve Bank, James Bullard, said the U.S. central bank should keep its mortgage-related asset purchase program beyond a scheduled expiration in March.
The Fed, which cut interest rates to near zero last December, has committed to keep borrowing costs ultra low for an extended period of time.
In October, sales of single-family homes -- the biggest segment of the market -- rose 9.7 percent, while condominium and co-ops increased 13.2 percent. Sales were up in all four regions of the country. Prices rose in the Midwest, which had not seen the same boom as the rest of the country.
Prices declined in the other three regions. The rise in the Midwest was the first gain in any region since November 2008.
The inventory of existing homes for sale in October fell to 3.57 million units from the previous month, NAR said. At October's sales pace, that represented a supply of seven months, the lowest in 2-1/2 years, from September's eight months.
The inventory of homes on the market must fall below six months' supply for there to be a balance between buyers and sellers, analysts say.
For a graphic on existing home sales click on: http://graphics.thomsonreuters.com/119/US_EXHOMS1109.gif
(Additional reporting by Corbett B. Daly in Washington, Burton Frierson and Julie Haviv in New York; Editing by Leslie Adler)
((lucia.mutikani@thomsonreuters.com: Tel: 202 898 8315; Reuters messaging: lucia.mutikani.reuters.com@reuters.net)) Keywords: USA ECONOMY/ (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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