WASHINGTON--While the housing market continues to suffer, September’s existing home sales report showed some signs of a market bottom.
The National Association of Realtors said Friday that existing home sales rose to a 5.18 million annual rate, up 5.5% from August’s number. Meanwhile, the median price for a home continued to fall, dropping 9.0% to $191,600.
Economists were expecting existing home sales to come in at a 4.97 million annual rate, according to data provided by Thomson Reuters.
Probably the best indicator that came out of the housing report was home inventories. The association said the supply of homes dropped from a 10.6-month supply of homes to a 9.9-month supply of homes. It’s the second month that the supply of homes has decreased. In order for home prices to stabilize, economists have noted that the supply of homes has to decrease.
NAR economist Lawrence Yun said the increase in home sales is “a nice jump.”
One month’s change in existing home sales is not a trend, economists warned, and several months of figures similar to September’s number would be required before analysts will call a housing market bottom.
“If this continues, people will stop expecting further price falls and activity will start to recover,” said Ian Shepherdson, chief U.S. economist with High Frequency Economics, in a research note.
Shepherdson noted that the bulk of the sales done in September were distressed sales primarily influenced by bottom-fishing.
“Most, if not all, the rise in sales is due to vulture investors buying cheap foreclosed homes, but all sales reduce inventory,” he said.
The average 30-year mortgage rate fell from 6.48% to 6.04% in September.
taken from foxbusiness.com