20 January 2012 16:24 [Source: ICIS news]
In its monthly report, NAR said December saw sales of 4.61m residential units, on a seasonally adjusted annual basis, and followed November’s downwardly revised 4.39m home sales, which were 1% better than October.
Last month’s sales of existing single-family homes, condominiums and co-ops also marked a 3.6% improvement over the December 2010 level.
“The pattern of home sales in recent months demonstrates a market in recovery,” said Lawrence Yun, NAR chief economist. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market."
For full year 2011, he said existing home sales rose 1.7% to 4.26m units sold from the 4.19m home sales recorded for 2010.
Association president Moe Veissi predicted the buying trend would continue through 2012.
“We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves,” he said.
Household formations occur when young people leave their parents’ home to either rent an apartment or buy a house. Economists estimate that the 2008-2009 recession forced delay of as many as 2m household formations.
“More buyers coming into the market means additional benefits for the overall economy,” Veissi said, “and when people buy homes, they stimulate a lot of related goods and services.”
The housing market is a key downstream consuming sector for a wide variety of chemicals, resins and derivative products.
While new home construction is the principal consuming engine for chemicals in the housing sector, the state of the existing homes sector is important because those sales take older residences off the market and help generate demand for new construction.
NAR said the inventory of existing homes available for sale fell by 9.2% in December from November to 2.38m units, which represents a 6.2-month supply at current sales rates. That figure is nearing a more normal inventory level, which in a non-recession market typically would be a four- to six-month supply.
The 2.38m existing homes for sale are down considerably from the record of just over 4m units on the market in July 2007.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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