November Produces a Big Gain for Existing-Homes, But a Slower Economic Rebound
December 22, 2009 - November's existing-home sales rose to a seasonally adjusted rate of 6.54 million units, a 7.4% increase from the month prior. For most economists, this came as predicted, knowing that many home buyers would hurry to close sales before the original November tax credit deadline.
"This is clearly a rush of first-time home buyers not wanting to miss out on the tax credit, but there are many more potential buyers who can enter the market in the months ahead," Lawrence Yun, NAR chief economist said. "In all, 4.4 million households are expected to claim the tax credit before it expires and balance should be restored to the housing sector with inventories continuing to decline."
Not since February 2007 have current existing-home sales remained this high.
However, despite today's sanguine release of November's existing-home sales, it was reported that U.S. economic growth expanded slower than anticipated for the third quarter. Growing at an annual rate of 2.2%, gross domestic product shows that economic recovery is off to a much weaker start than originally predicted. Nearly a month ago, most estimated that growth would be 2.8%, but the most current report showed that consumer spending was weaker than previously thought.
Even with slower growth, the November's GDP was the best economic reading since December 2007.