US Oct existing home sales rise 2% and builders gain confidence

19 November 2012 16:46  [Source: ICIS news]

WASHINGTON (ICIS)--US sales of existing homes rose by 2.1% in October from September, and home builders are increasingly confident about the nation’s housing recovery, two reports indicated on Monday.

The National Association of Realtors (NAR) said that its monthly survey of residential real estate transactions across the country found that sales of existing homes rose in October to a seasonally adjusted annual rate of 4.79m from the September pace of 4.69m, an advance of 2.1%.

In addition, NAR noted that the October rate of existing home sales is nearly 11% ahead of the same month last year.

NAR chief economist Lawrence Yun noted that Hurricane Sandy – which struck the US northeast on 29 October – came too late in the month to have significant impact on the association’s sales survey data. 

However, Yun said the storm’s effects on housing sales and prices would probably be felt over the next several months.

Total housing inventory at the end of October fell by 1.4% from September, NAR said, with 2.14m homes available for sale.  That represents a 5.4-month supply at current sales rates, down from the 5.6-month inventory seen in September.

That level of for-sale housing inventory is near normal, and it is the lowest since the 5.2-month supply seen in February 2006 when the US housing boom was still near its peak.

In another sign of a recovering US residential sector, the National Association of Home Builders (NAHB) said its housing market index (HMI) shows that confidence among contractors jumped by five points in November from October to a reading of 46.

“This marks the seventh consecutive monthly gain in the confidence gauge and brings it to its highest point since May of 2006,” the association said. In May 2006, US housing construction was still moving at a fast pace, although the boom was beginning to deflate.

The HMI is a compilation of three subsidiary measures: home builders’ current sales of single-family homes; the number of prospective home buyers visiting model homes; and contractors’ expectations for home sales over the next six months.

On the 1-100 HMI scale, a reading of 50 or above indicates that home builders are confident about their prospects over the next six months.

During the US housing boom years of 2002–2006, the housing market index had held steady in the mid-60s and even reached the upper-70s at times.

At the bottom of the US 2008-2009 recession, the HMI hit an all-time low of 8 in January 2009.

“While our confidence gauge has yet to breach the 50 mark,” said NAHB chief economist David Crowe, “we have certainly made substantial progress since this time last year, when the HMI stood at 19.”

The US housing sector is a crucial downstream consuming industry for a wide range of chemicals, resins and derivative products, used either as home components or in the production of construction supplies.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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