Stocks rose Tuesday after an industry group said sales of existing homes rose more than expected in November. The advance comes despite government data that showed U.S. economic activity was weaker than expected in the third quarter.
Sales of existing homes jumped again in November, after surging 10% in October, growing 7.4 percent compared with October to an annualized rate of 6.54 million units, according to the National Association of Realtors.
Lawrence Yun, NAR's chief economist said, "This clearly is a rush of first time homebuyers not wanting miss out on the tax credit."
Originally November was going to be the last month in which first time homebuyers would qualify for a federal tax credit of up to $8,000. That deadline however, was extended and expanded for buyers and they now have up until June to purchase a home.
Because of the tax credit's plug originally scheduled to be pulled in November, buyers pushed up their closings to November from December causing industry experts to expect home sales to slacken this month.
But with all the glimmers of hope we've had this year, Mark Zandi, chief economist for Moody's Economy.com, has some not so bright predictions. Home prices are going to fall 5% to 10% more and over 30% in cities like Miami from now and this time next year. In 2011 they might turn around. The keyword here is "might."
Studies show that most consumer markets won't begin to see an increase in home prices until 2011. Any bright side to this? "It's clear we're closer to the end of this crash than the beginning," says Zandi. Housing is more affordable, and construction is still low, so sales will eat up excess inventory. "We're moving in the right direction, and that's reason for optimism," he says.
Some say another plus is: He says there's almost zero possibility of another U.S. housing bubble anytime soon. We say, how about just a little one?
Who thinks we need another housing bubble, at least a little bit of a push, to get us out this hole?
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