Sales of existing homes showed a modest 3 percent increase in November, a real estate trade group said yesterday. Some analysts took the report as a possible harbinger of better days ahead for the slumping housing industry.
The National Association of Realtors said that sales of existing single-family homes last month posted their first increase since a 5.1 percent advance in August.
Sales had fallen 9.4 percent in September and 3.8 percent in October, pushing the annual sales rate to its lowest level in almost six years. The 3 percent November increase lifted sales to an annual rate of 3.14 million units, still 12 percent below where they were a year ago.
Some analysts, however, said they believed the November increase could at least mark the end of a two-year slide in housing, although they cautioned against looking for much of a rebound before spring.
"Although the worst is probably over for the housing sector, it is going to be a long bottom," said David Wyss, an economist with DRI-McGraw Hill Inc., a Lexington, Mass., economic forecasting firm. "Mortgage rates have not come down that much and with home prices still declining, people are afraid to buy."
Wyss said he expected to see sales begin to rebound in the spring, helped out by an easing of credit being conducted by the Federal Reserve.
Allen Sinai, chief economist of the Boston Co., a Boston economic and investment advisory firm, said a rebound in the housing industry will be critical if the country is to avoid a lengthy recession, since there is little prospect that other segments of the economy will be showing much strength.
"Home sales and housing construction have really been in a recession for two years now. Housing is traditionally the first sector into a downturn and the first sector out, and we think that will occur this time as well," he said.
Analysts credited the improvement in November to continued declines in mortgage rates. Rates on 30-year fixed mortgages, which have fallen to the lowest levels in three years, now stand at 9.64 percent.