U.S. Existing Home Sales Post Strong Gain

By John S. McClenahen Call it the October housing surprise. Earlier this month the U.S. Commerce Department reported that housing starts for October had fallen to an annual rate of 1.6 million, much lower than economists generally expected. Now the Chicago-based National Association of Realtors (NAR) reports that sales of existing homes increased 6.1% in October to a seasonally adjusted annual rate of 5.77 million units, higher than expected. Indeed, October's rate was the third-highest monthly pace on record. "Obviously, historical lows in mortgage interest rates in recent months are a big stimulus," notes David Lereah, NAR's chief economist. "At the same time, the inventory of homes on the market, which was historically lean during the first half of the year and limited housing choices, improved in August and September," he adds. "Since it takes some time between purchase offers and transaction closing, what we're seeing now is the result of a better combination of conditions that began in August and September."

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