NEW YORK (TheStreet) -- Worse than expected sales of existing homes suggested the housing market's recovery remains sluggish.
Existing-home sales for November rose 4% to a seasonally adjusted annual rate of 4.42 million units from 4.25 million in October, according to the National Association of Realtors.
The reported figure for November was a disappointment given that October sales were downwardly revised from 4.97 million to 4.25 million units. Economists polled by
forecast a 2.6% gain in existing home sales to a seasonally adjusted annual rate of 5 million after a 1.4% advance in October.
"The downward revision to already poor numbers is going to offer little comfort to homeowners," wrote David Semmens, U.S. economist with Standard Chartered Bank, in a research note. "It does little to dispel the notion of housing still under some duress, but a gain is a gain and the big downward revisions are interesting but history," wrote David Ader, market strategist with CRT Capital Group.
Existing home sales tallies up all the sales completed for single family homes, townhouses, apartments and co-ops.
Analysts were optimistic that today's report would be yet another sign of life in housing, although they were cautious that a consistent uptrend may not come until 2012.
"The only advance guide to the headline number is the pending home sales index for October, which jumped 10.4%," wrote Ian Sheperdson, U.S. economist with High Frequency Economics, before the release of the report. "While any increase in home sales is to be welcomed, we cannot yet argue that the trend has definitely turned higher. We think a real, if modest, upturn in sales next year is a very good bet, but we need to see a sustained rise in mortgage demand in order to confirm the story."
The average commitment rate of a 30-year fixed-rate mortgage fell to a record low of 3.99% in November from 4.07% in October, according to Freddie Mac. Mortgage demand remains below the 4.3% rate seen in November 2010.
"Sales reached the highest mark in 10 months and are 34 percent above the cyclical low point in mid-2010 - a genuine sustained sales recovery appears to be developing," said Lawrence Yun, NAR chief economist. "We've seen healthy gains in contract activity, so it looks like more people are realizing the great opportunity that exists in today's market for buyers with long-term plans."
Yesterday, the Commerce Department said that housing starts and building permits surged in November, albeit mainly due to growth in the multi-family sector. Homebuilders began construction on 9.3% more homes, while building permits jumped 5.7% last month. In comparison, single-family starts rose 2.3%.
According to today's release, single family home sales rose 4.5% in November and are 12.9% above the level seen for November 2010. Existing condominium and co-op sales were unchanged in November and are 6.8% higher than the level one year ago.
Economists say that renting, not buying is fueling the current housing demand, although the economy may see an upturn in single family housing demand soon. Already, homebuilder sentiment has improved for three straight months in December, according to the National Association of Home Builders' NAHB/Wells Fargo index.
Nevertheless, the housing sector is well off its 2010 late-spring peak, when buyers were rushing to take advantage of federal tax credits for homebuyers and is only slightly higher than at the beginning of 2010. Whereas other sectors have begun a rebound in earnest, the housing sector continues to hamper down on the economy.
-- Written by Chao Deng in New York