Slight uptick in Nov. sales of existing homes

Sales of existing homes rose slightly in November - but the gain was powered by slumping house prices, a signal that there was no respite from the slump in the housing market.

"It's a pause in the downward trend in home sales, but I wouldn't rush to any conclusions and say the housing market is starting to stabilize," said Michael Moran, chief economist at Daiwa Securities America Inc., of New York. "Housing will still be a negative for the economy for a while."

The industry remains troubled by high foreclosure rates and hard-to-get credit.

The National Association of Realtors reported yesterday that sales of existing single-family homes rose 0.4 percent in November from October to a seasonally adjusted annual rate of five million units. But that was down 20 percent from November 2006 and was the second-lowest since 1999, when record-keeping began. The lowest was October's 4.98 million pace.

The increase in home purchases was led by a 10 percent rebound in the West. Sales declined 3.3 percent in the Northeast and 2 percent in the South. Sales were little changed in the Midwest.

The overall sales gain may be short-lived as stricter lending rules threaten to further depress the industry.

"The trend is toward weaker sales in the next quarter," said Julia Coronado, senior economist at Barclays Capital, of New York.

The median value dropped 3.3 percent to $210,200 in November from $217,400 in November 2006. Sellers are cutting prices, and builders are scaling back projects to trim a glut of inventories of unsold homes.

It was the fifth-biggest annual decline on record for the median price, which is the point at which half sell for more and half sell for less.

The trade group said the number of homes for sale at the end of November fell 3.6 percent to 4.27 million. At the current sales pace, that represented 10.3 months' supply, compared with 10.7 months in October.

"Inventory is still high, and further reduction in prices may be required in some areas to induce buyers back into the market," Lawrence Yun, the real-estate-agents group's chief economist, said in a statement.

Declines in home construction have detracted from the nation's overall economic growth for the last seven quarters and are likely to keep weighing on it, according to Ethan Harris, chief U.S. economist at Lehman Bros. Holdings Inc., of New York.

"The housing pain looks likely to continue through 2009," Harris wrote in a Dec. 20 note to clients. He predicted "sales and starts to fall through the middle of 2008, gradually rising in 2009."