The Lehmann Letter ©
Today the National Association of Realtors announced a big jump in existing-home sales: http://www.realtor.org/press_room/news_releases/2009/11/record_big
Sales were a revised 5.5 million in September and jumped to 6.1 million in October at a seasonally adjusted annual rate.
You can see the strength of this gain if you plug October’s 6.1 million into the chart below. It represents a significant upward trend.
Existing Home Sales
(Click on image to enlarge)
Now for some big questions: Will this surge expire on April 30, 2010 along with the first-time home-buyer tax credit? (Recall that auto sales fell back to earth with the end of the cash-for-clunkers program.) Can momentum be maintained if the tax credit is extended, or have most potential buyers already acted? Is this an omen for new-home sales and residential construction, or will the market-overhang of unsold inventory and rising foreclosures continue to depress new-home building?
These questions are important because the economy can’t recover unless existing-home activity is reflected in new construction.
(The chart was taken from http://www.beyourowneconomist.com. [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.)
© 2009 Michael B. Lehmann