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.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2