The outlook for the housing sector is turning higher. Existing home sales came in at a much higher-than-expected annual rate of 6.10 million, up a record 10.1 percent in October (September revised slightly lower to 5.54 million). The year-on-year rate, at plus 23.5 percent, is also a record (series begins in 1999).
October's 6.10 million rate, which is far outside even the highest estimates, was driven by this month's expiration of first-time buyer credits. But the National Association of Realtors, which compile the data, notes that sales in months as far ahead as January may also get a boost from the last minute rush. New stimulus measures, which have been extended and expanded, point of course to a further boost.
Supply on the market fell 136,000 units to 3.57 million, which is equal to seven months of supply vs. 8.0 months in September and 10.2 months a year ago. The NAR estimates that 6.0 months of supply is consistent with price stability. Prices are still falling in what is the only negative in the report. The median price fell 1.6 percent to $173,000, down 7.1 percent year-on-year.
Government stimulus is having a big impact on the housing market, pulling future sales into current months. Talk this morning that policy makers may extend buybacks of mortgage-backed securities further underscores the depth of government involvement in housing. Stocks and commodities moved higher in immediate reaction to today's report. New home sales will be posted tomorrow.