Home Sales Up 14.5% Year-on-Year and Third Quarter GDP Up 3.1%

There's more good news on the economic recovery as existing home sales for November increased on year by 14.5% and third quarter GDP rose at an annual rate of 3.1%.

Sales of existing homes highest in three years has the breaking news:

"Sales of existing homes climbed in November to the best rate in three years, a trade group said Thursday.

Existing home sales rose 5.9% in November to a seasonally adjusted annual rate of 5.04 million, reaching the highest rate since November 2009, the National Association of Realtors reported Thursday.

“Momentum continues to build in the housing market from growing jobs and a bursting out of household formation,” said Lawrence Yun, NAR’s chief economist, in a statement. . . .

Sales are up 14.5% from the prior year.

Thursday’s housing data echo other recent positive reports as the market continues to benefit from low rates and prices. A gauge of sentiment among home builders has been on the rise, as is the trend for new construction.

However, the housing market still has far to go, and faces substantial headwinds from ongoing high unemployment and strict lending standards, among other factors. The share of existing-home sales accounted for by first-time buyers has declined.

According to NAR, first-time buyers made up 30% of purchases in November, compared with 31% in October, and 35% in November 2011.

The median existing-home price rose 10.1% from the prior year to $180,600, according to NAR.

Inventories declined 3.8% to 2.03 million units in November, representing at the current sales rate a 4.8-month supply, the lowest since September 2005.

Elsewhere Thursday, the Federal Housing Finance Agency reported that U.S. house prices rose a seasonally adjusted 0.5% in October, and that prices rose 5.6% from the same period in the prior year.

Also Thursday, the U.S. Department of Commerce reported that the U.S. economy grew faster than previously estimated for the July-to-September quarter due to stronger trade, faster health-care spending and increased local government construction.

Gross domestic product in the third quarter grew at a seasonally adjusted annual rate of 3.1%, the fastest rate since growth of 4.1% in the fourth quarter of 2011. See Third-quarter U.S. growth revised higher."

Summing Up

While economically it's likely to be two steps forward and one step back well into 2013, today's report was indeed good news.

There will time enough to absorb the inevitable future bad news that will be forthcoming from time to time, but let's be happy that we're finally moving in the right direction and winning more games than we're losing.

We'll stay tuned, but all in all it's definitely looking better for the U.S. economy, although we're probably slowing down to a virtual crawl in this final quarter of 2012.

But then it will be on to 2013 and more solid gains, assuming the politicians don't manage to snatch defeat from the jaws of victory.

Thanks. Bob.