Existing Home Sales Up, But Prices Still Weak

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Existing home sales rose 5.6% in November to a seasonally adjusted annual rate of 4.68 million.  But “are 27.9 percent below the cyclical peak of 6.49 million in November 2009, which was the initial deadline for the first-time buyer tax credit,” the National Association of Realtors said.

The national median existing-home price for all housing types was $170,600 in November, up 0.4 percent from November 2009. It appears that distressed sales, which account for about a third of sales, have continued pressure on the market.

Lawrence Yun, NAR chief economist said “The relationship recently between mortgage interest rates, home prices and family income has been the most favorable on record for buying a home since we started measuring in 1970. Therefore, the market is recovering and we should trend up to a healthy, sustainable level in 2011″

Yun may be entirely wrong. Interest rates are on the way up again. Combined with an employment market which is weak and getting weaker, the trouble with the housing market may improve at all. An ongoing rise in interest rates which could be a result of new government tax policies may actually make matters worse.

Douglas A. McIntyre

Douglas A. McIntyre