The US real estate market, after going from a period of red-hot growth to a painful slump, may finally be starting to stabilize, analysts said after the latest data on the sector were released this week.
The National Association of Realtors (NAR) said on Thursday that existing-home sales had risen 0.6 percent to a seasonally adjusted annual rate of 6.28 million units last month, well ahead of the 6.15 million figure expected on Wall Street.
This followed a 0.5 percent increase in October.
Earlier in the week, the government said the smaller market for new US home sales rose 3.4 percent, defying expectations for a further slide.
A separate report this month showed housing starts rose 6.7 percent last month to a seasonally adjusted rate of 1.588 million units.
Analysts say the real estate market is not completely out of the woods yet.
And the drop in prices for most categories suggests that costs had gotten too high and needed to retreat further to keep buyers in the market.
But Michelle Meyer, an economist at Lehman Brothers, said the worst may be over after a horrendous slump in the third quarter that saw an 18.7 percent year-over-year slide in real estate spending.
"It looks like the housing market is beginning to return to equilibrium and begin to stabilize," she said.
"We expect sales to remain around the same level and inventories to decline," she said.
Housing had underpinned US economic growth for several years, owing to the "wealth effect" that prompted US citizens to spend as the value of their homes increased, and in many cases take out second mortgages to spend even more.
The slump in the past year had raised fears that the opposite could occur -- a retrenchment of consumers in response to lower home prices.
Meyer said the latest data are positive for the economy, because they take away "fears for many people that the housing market will be a large drag on the economy."
Last month's sales level for existing homes was still 10.7 percent below the pace of a year ago, reflecting the tumble in the real estate market after years of spectacular growth.
But David Lereah, NAR's chief economist, said that the report suggested the worst of the slump could already be over for the real estate market.
"As the housing market recovers from its correction, existing-home sales should be rising gradually during 2007 -- it looks like we may have reached the low point for the current cycle in September," he said.
The latest report showed that housing inventory levels had fallen 1.0 percent at the end of last month to 3.82 million existing homes available for sale.
That represents a 7.3-month supply at the current pace of sales.
The median existing-home price for all housing types was US$218,000 last month, which is 3.1 percent lower than in November of last year and slightly below the median for October of this year.
Other analysts are cautious about the outlook.
Patrick Newport at Global Insight said the market had been helped by a drop in interest rates since June and "incentives" such as sellers offering financing, to keep the market from slumping further.
"Suppose sales have stabilized. Does this mean the worst is now behind? Unfortunately, housing permits are still falling, which points to further declines in starts," Newport said.
"Until inventories are drawn down -- and stronger sales will help do this -- permits and starts will continue to fall. This means that spending on residential construction will also continue to drop," he said.
Newport said that he expected the decline in residential construction to take about 1.4 percentage points off of US economic growth in both the fourth quarter of this year and the first quarter of next year.
"Afterward, the bites will get progressively smaller," he said.
Mark Vitner at Wachovia Securities said the question of whether there was "a housing bubble" is now irrelevant.
"The housing market hit a cyclical peak right about the time Hurricane Katrina hit New Orleans and has slowed appreciably ever since. Sales of new homes have fallen 24 percent since peaking in July of last year, and sales of existing homes are down 11.6 percent over this same time period," he said.
A correction is underway but not over, Vitner said.
"Booms and busts do not last forever," he noted.
"The housing market will eventually move back into balance, as builders build fewer homes and more households opt to become homeowners. We see this process as already underway," he said.
HONG KONG SECURITY: The president blasted regulations requiring Taiwanese agents or political organizations to provide information on their Hong Kong-related activities President Tsai Ing-wen (蔡英文) yesterday warned of countermeasures should controversial Chinese national security legislation imposed on Hong Kong undermine or harm Taiwanese interests. Article 43 of the legislation empowers the Hong Kong Special Administrative Region to serve written notices to Taiwanese political organizations or individual agents to furnish information on their Hong Kong-related activities, including their personal particulars, finances, assets, expenditure and capital in the territory. Failure to comply or providing false or incomplete information can result in a fine of HK$100,000 (US$12,903) or imprisonment of six months or two years respectively. Tsai said that Taiwan would keep a close watch on how
PROBE LAUNCHED: An officer who served as a supervisor in the drill died in an apparent suicide after the accident, which was caused by unexpected waves Two marines who were on Friday injured in a military exercise in the waters off Kaohsiung passed away yesterday, Navy Command said. The marines — surnamed Tsai (蔡), 26, and a sergeant surnamed Chen (陳), 36 — were in a seven-member Marine Corps team that encountered rough seas during a simulated response to enemy forces landing on Taiwan. Their rubber craft overturned in waters off Taoziyuan (桃子園) beach in Zuoying District (左營), injuring four of the marines. They were rushed to hospital, where three of them — Tsai, Chen and a 34-year-old sergeant — were taken to an intensive care unit
MORAL COURAGE: The Ministry of Foreign Affairs urged the global community to face China’s intention to subdue Taiwan and reject such irrational requests The Ministry of Foreign Affairs yesterday strongly condemned the Chinese government for meddling with US officials’ interactions with Taiwan after FBI Director Christopher Wray revealed China’s efforts to discourage US officials from visiting Taiwan. The greatest long-term threat to the US’ information security and intellectual property, as well as its economic vitality, is China’s counterintelligence and economic espionage operations, Wray told a video event at the Hudson Institute in Washington. Beijing is engaged in a highly sophisticated and maligning foreign influence campaign, with methods that include bribery, blackmail and covert deals, he said. Giving an example, Wray said that when a US official
‘SIGNAL TO ALLIES’: The US Navy’s exercises are not in response to those carried out by China, the commander of the strike group led by the USS ‘Ronald Reagan’ said Two US aircraft carriers were yesterday conducting exercises in the disputed South China Sea, the US Navy said as China also carried out military drills that have been criticized by the US Department of Defense and neighboring states. China and the US have accused each other of stoking tension in the waterway at a time of strained relations over everything from COVID-19 to trade to Hong Kong. The USS Nimitz and USS Ronald Reagan were carrying out operations and exercises in the South China Sea “to support a free and open Indo-Pacific,” the navy said in a statement. It did not say exactly