US November existing home sales rise 0.4 pct to 5.00 mln annual rate UPDATE

US November existing home sales rise 0.4 pct to 5.00 mln annual rate UPDATE

	Published : Mon, 31 Dec 2007 17:45 By : Agencies Print this Story

(Updates with reaction)

WASHINGTON (Thomson Financial) - Existing home sales in the US rose marginally in November, the National Association of Realtors (NAR) said today, the first increase after eight straight months of declines.

Sales increased 0.4 pct to an annual rate of 5.00 mln units, up from the upwardly revised annual rate of 4.98 mln for October.

Economists were predicting a 4.97 mln unit rate, unchanged from the originally reported October rate, based on a stabilization of the pending home sales data in the last two months.

Single-family home sales were up 0.7 pct for the month to an annual rate of 4.40 mln units. Condo sales were down 1.6 pct to an annual rate of 600,000, the lowest in six years.

The month-end backlog of unsold homes on the market fell 3.6 pct to 4.27 mln units, a 10.3 months supply at the current sales rate. That was an improvement in the inventory overhang from the revised 10.7 months in October, but NAR senior economist Lawrence Yun said 'inventory is still high, and further reduction in prices may be required in some areas to induce buyers back into the market.'

Harm Bandholz of Unicredit said inventories of unsold homes are main a concern.' He added, 'Even after their slight drop in November, they stay close to all-time highs and it will take time and lower house prices to get rid of these inventories.'

The median price of an existing home sold in November was 210,200 usd, down 3.3 pct from November of last year.

For single-family homes, the price drop was 3.7 pct from last year to a median of 208,700 usd.

Sales have been stymied in many markets because buyers have trouble arranging financing and sellers remain reluctant to cut prices, but the realtors group believes another factor is the decision by many would-be buyers to wait for lower prices.

'We have many people simply waiting and waiting to get into the market,' Yun said, 'trying to market-time' for a lower price or lower interest rates.

Last week, the S&P/Case-Shiller 20-city composite index of home prices showed a record 6.1 pct year-over-year drop for October. The NAR has complained that continued reports of falling prices are contributing to that consumer psychology.

Regionally, home sales rose 10.3 pct in the West after two exceptionally bad months. Sales were unchanged in the Midwest, and sales declined 2.0 pct in the South and 3.3 pct in the Northeast.

However, 'given that several local markets in the western portion of the country seem to be in the midst of price adjustments,' the sales hike in the West 'is likely to be temporary,' said Michael Moran of Daiwa Securities America.

Analysts said today that despite November's slight increase, existing home sales could still decline in the future.

'Despite the good news in this report, we could just be in the eye of the storm, as a significant number of mortgages reset early in 2008 will likely increase delinquencies and foreclosures driving prices lower and pushing buyers away,' Benjamin Reitzes of BMO Capital Markets said.

Moran said, 'With lending standards now tighter and with many potential buyers probably hesitating to purchase a depreciating asset, sales could lose further ground in the future.'

NAR's Yun recommended 'more powerful monetary policy' as a way to improve the market. In particular, he said that the Federal Reserve should make a one-time interest rate cut of preferably three-quarters of a point rather than the more gradual quarter point cuts they have made during their last two meetings.

He also suggested expanding the loan limit for Fannie Mae and Freddie Mac in order to lift the housing market, particularly in the jumbo sector.

tessa.moran@thomson.com

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