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Existing Home Sales Spiked 4 Percent In November

The National Association of Realtors reported this week that sales of existing homes rose to their highest level in ten months in November, providing a boost in optimism over the US housing market as the year winds down. According to the report, sales of previously occupied homes sales jumped 4 percent last month to an annualized pace of 4.42 million, the fastest sales pace since January. The news gave a much needed boost to the market just days after the NAR revealed that sales had been lower than previously reported over the last four years. The housing market was at the core of the problems that led to the worst US recession since the 1930s. When subprime borrowers began defaulting in early 2008, it created a chain reaction that fueled the financial collapse that started a recession. The bright side of the NAR's downward revisions is that the mistakes also overestimated inventory of unsold homes on the market, which fell to a six-year low last month, meaning that oversupply will likely not be a drag on prices for the next few months. While 4 percent higher than October's pace, last month's sales were still considerably below the 5.05 million pace expected by analysts in a recent Bloomberg survey. The range of estimates among the 71 economists in the survey varied from 4.38 million and 5.25 million. The range was wider than usual because some of the economists accounted for the NAR's downward revisions while others did not. October's pace was also revised downwardly, to an annual rate of 4.25 million from an initially estimated 4.97 million.

December 13, 2011

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