Existing home sales fell 2.2% in October after two months of gains, to a seasonally adjusted rate of 4.43 million. Even as home sales languished, the Q3 GDP was revised upward in figures released Tuesday by the Department of Commerce.
According to data released on Tuesday from the National Association of Realtors (NAR), September’s sales figures were at 4.53 million. Year-to-date sales were down 2.9% for 2010, at 4.149 million, while in 2009 at this time sales totaled 4.272 million.
Lawrence Yun, chief economist for NAR, said in a statement that this pattern will most likely continue.
“The housing market is experiencing an uneven recovery,” he said, “and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales.” Still, he noted, sales are no longer bottoming and are “attempting to settle into normal sustainable levels.” He added that he expects sales to continually improve, due to improving conditions in the job market and low prices; they should top 5 million, he said, by the spring of 2011.
Ian Shepherdson, chief U.S. economist for High Frequency Economics, pointed out that sales were “slightly below the consensus” of 4.48 million. “The dip in sales,” he said in a statement, “is dead in line with the decline in the pending sales index for September.” Sales had dropped after the tax credit expired at the end of April, but then recovered somewhat during August and September.
In October, that recovery ceased. Shepherdson said that potential buyers are most likely “biding their time to see how far prices fall” now that the tax credit has ended; he did not foresee any immediate change in that situation.
“This is potentially dangerous,” he added, “because it can be self-fulfilling; the more people who wait, the more chance there is prices will fall. We expect activity to start recovering properly next spring as payrolls rise more quickly.” However, he warned, the “next few months will be tough.”
As for the GDP, economists had expected the numbers to be increased from the preliminary estimate of 2.0% to 2.4%; instead, the revision hit 2.5%, showing that the economy had grown a bit faster than expected.
Consumer and government spending were both higher than original expectations, according to a Reuters report, with the former increasing at a rate of 2.8% instead of the originally projected 2.6%. Government spending was up by 4.0% instead of the originally estimated 3.4%, and business spending also picked up, at 10.3% instead of 9.7%.