us existing home sales rising at fastest annual pace for nearly three years
News Posted On: 23 December 2009
Data released by the National Association of Realtors (NAR) on Tuesday showed existing home sales rose 7.4 percent in November to an annual rate of 6.54 million units, up from 6.09 million in October, easily beating market expectations for 6.25 million. The rate of increase was the fastest recorded since February 2007.
Meanwhile the Department of Commerce released their estimate for GDP growth in the 3 rd quarter. Markets had expected 2.8 percent – the revised number was actually 2.2 percent. Nevertheless analysts were still upbeat, with the consensus view being that the housing market, having triggered the worst U.S. recession in 70 years, was now stabilizing.
"The economic reports of late have been very upbeat. Most people are looking now for 3.5 to 4.0 percent GDP growth in the fourth quarter, and the housing numbers are the icing on the cake," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville, Tennessee.
Another even more positive trend is the slowdown in median house price decline. NAR said the annual 4.3 percent drop in November was the smallest since the same month in 2007.
The report from the U.S. Federal Housing Finance Agency indicating a monthly rise in home prices of 0.6 percent in September added to the optimistic outlook.
"We have established a definitive turn in the housing market, but it continues to be reliant in government support. We should see a passing of baton from a government-supported housing rebound to one that is self-sustaining," said Richard DeKaser, president of Woodley Park Research in Washington.
Meanwhile accumulating retail sales, business inventory and trade balance data point to accelerating economic growth in the fourth quarter. Consequently the Federal Reserve's current view of the economy is upbeat. It has promised to keep rates near zero for an "extended period" to aid recovery and is being helped to maintain that position by a strong rise in the value of the dollar in recent weeks.
With the housing market firming and the dollar rallying, US real estate should appreciate faster in other currencies such as the British pound and the Euro, while historic low interest rates continue to underpin domestic demand.
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