The housing market is in for an uneven recovery, with existing home sales slowing in October after two months of strong gains. The National Association of Realtors (NAR) reported a 2.2% decrease in existing home sales in October following gains of 10% in September and 7.6% in August. Existing home sales dropped to 4.43 million, from 4.53 in September. Year-over-year, this is 25.9% below the 5.98 million sales in October 2009.
Overall, the previous gains show that the recovery is underway, but the weak sales in October indicate that this will be far from smooth.
This decline was anticipated, following a 1.8% decline in the pending home sales index (PHSI) in September. The PHSI, based on contracts signed is a leading indicator of existing home sales, which are based on closings. Closing typically occurs one to two months after the contract is signed.
The hiatus in the recovery was broadly based, across all sectors and all regions. Single family home sales fell 2% to a seasonally adjusted rate of 3.89 million. Condominium and coop sales also slipped, falling 3.6% to 540,000. While sales in the Midwest were down 1.1%, the Northeast lost 1.3%, the South fell 3.4% and the West dropped 1.9%.
The NAR place the current stumble in context, identifying that ”… sales activity is clearly off the bottom and is attempting to settle into normal, sustainable levels.” Also suggesting that “… Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring next year.”