US home sales rose last month, adding to hints of recovery, but updated data showed the housing crash was much deeper than previously thought.
The National Association of Realtors (NAR) said on Wednesday that sales of previously owned homes increased 4 percent from October to an annual rate of 4.42 million units.
At last month’s sales pace, the 2.58 million unsold homes on the market represented a seven-months’ supply, the lowest since February 2007 and a sign that the backlog of inventory that has been weighing on the market was clearing.
The rise in sales and drop in inventory was the latest suggestion the housing sector, which triggered the 2007 to 2009 recession, may be on the cusp of a recovery. Data on Tuesday showed housing starts scaled a 1.5-year high last month.
“The housing market is finding its bottom, and that will translate into more growth in GDP and less of a drag on consumer confidence,” said chief economist at Comerica in Dallas, Robert Dye. “But we still have a long, long way to go.”
The pickup in sales, however, is coming off a deeper trough.
The NAR said it had overstated sales from 2007 through last year by 14.3 percent. Sales over that period averaged 4.42 million units a year, not 5.16 million, and they bottomed at a 3.30 million-unit pace in July last year, rather than 3.86 million, underscoring the depth of the downturn.
The group blamed double-counting of properties, builders selling homes through real-estate brokers and geographic population shifts as among the reasons for its mismeasurement.
A housing recovery could help underpin what already appears to be a quickening of US economic growth. During normal times, economists estimate that one out of every eight jobs in the economy is generated by housing-related activity.
The chief economist for the Realtors’ group, Lawrence Yun, said existing home sales for this year were expected to total 4.25 million units, up from 4.19 million units last year.
While the US economy appears to be gathering strength, the global backdrop remains troubling with much of the world slowing down and Europe sliding into an almost certain recession.
In addition, lawmakers have yet to break an impasse over extending a payroll tax cut for 160 million US workers that expires at the end of the year. Economists have warned a failure to keep the tax cut in place could hit the economy hard.
The median sales price rose 2.1 percent from October, but was still down 3.5 percent from a year ago at US$164,200.
Distressed properties, foreclosures and short sales, which typically occur at deep discounts, accounted for 29 percent of sales last month, up from 28 percent in October.
“We expect months’ supply to head higher as inventory enters the market,” said a senior economist at Bank of America Merrill Lynch, Michelle Meyer. “With a sluggish economic recovery, low consumer confidence and tight credit conditions, it will be difficult to clear the excess inventory.”
“There is still a bumpy road ahead for the housing market,” she said.