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.
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