Existing home sales in the U.S. picked up again in November, after a surprising drop during October, according to a report by the National Association of Realtors.
Existing home sales rose 5.6 percent to a seasonally adjusted rate of 4.68 million in November, from 4.43 million in October but remained below the cyclical peak last year, which was the initial deadline for the first-time buyer tax credit.
Distressed home sales accounted for about 33 percent of total sales during November, down from 34 percent in October.
Home prices also rose 0.4 percent from last year.
Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable, Lawrence Yun, the chief economist at NAR, said in a statement.
Winter is traditionally weaker period to buy houses, therefore providing serious buyers more opportunities and better pricing.
Buyers will enjoy favorable affordability conditions into the new year, although mortgage rates are expected to gradually rise as 2011 progresses, NAR President, Ron Phipps, said.
Housing and consumer spending are two of the most important components of GDP growth. The U.S. Commerce Department said that the U.S. economy had grown 2.6 percent, compared to the previous estimate of 2.5 percent, in the third quarter. Much of the growth was due to increased consumer spending as well as lower imports and better private inventory investment.
Housing sales have remained weak and uncertain over the past few months, rising and dipping, as the market remains unsure about the employment situation in the U.S. Unemployment rates hover at 9.8 percent, and job creation remains much below what is required to really bring down these high rates.
The quantitative easing announced by the U.S. Federal Reserve in November is expected to create about 700,000 jobs by 2012, while currently the economy requires about 200,000 new jobs per month to reduce the unemployment rate.
However, economists are more positive about the GDP continuing to grow in the fourth quarter and 2011.
Thanks to improved consumer and business confidence the momentum of growth in the four quarter has picked up. IHS Global Insight now expects fourth quarter growth to come in over 3 percent, Nariman Behravesh, an economist at IHS Global Insight said in a note.
Stronger growth momentum and the passage of the tax legislation mean that growth in 2011 is also likely to be in the 3 percent to 3.5 percent range, he added, stating that the soft patch is over and that growth has broken out of the 2 percent to 2.5 percent range