FXstreet.com (Barcelona) - Existing home sales are expected to hold steady over the next few months, as indicated by November's pending home sales activity, which remains above the level of August and September, according to the latest report by the National Association of Realtors.
Pending home sales have decreased 2.6% in November to a reading of 87.6 from a strong upward revision of 89.9 in October. On the year, pending home sales have decreased 19.2% from the 108.4 reading posted in November 2006.
According to the report, the NAR expects existing home sales to total 5.66 million in 2007 to edge up to 5.70 million in 2008 and 5.91 million in 2009, figures still substantially lower than the 6.48 million posted in 2006.
Existing home sales prices are expected to decrease 1.9% in 2007 to a median of $217,600 to remain practically unchanged in 2008 and then increase 3.1% in 2009 to $224,400.
Despite the slightly positive figures, Ian Ian Shepherdson, Chief U.S. Economist at High Frequency Economics, Ltd warns aboux a excessive optimistic analysis on the data: The level of the index suggests that existing home sales in December were flat or slightly higher than in November. This does not mean, in our view, that the decline in sales is over; instead, it reflects the unsustainable speed of the drop in the late summer, when the pending sales index plunged by a total of 16.5% in two months.
The market , however, remains on the downside, according to Shepherdson, as the fast-droppong housing prices discourage people to buy a house: Despite this modest correction, the underlying trend in sales remains downwards, because people are unwilling to borrow money in order to finance the purchase of rapidly depreciating assets.