Home resales up despite drop in consumer confidence
By George Hager and Thomas A. Fogarty
USA Today
Consumers' confidence fell this month for the fifth straight month, the result of widespread insecurity over jobs, says the Conference Board.
But consumers remained confident enough to commit to buy homes. Sales of existing homes roared back in October, rising 5.5 percent after a steep drop in September, the National Association of Realtors says.
The reports, both issued yesterday, present a muddled picture. Consumers remain anxious, but low-cost financing keeps them spending on big-ticket items such as homes and cars.
The November consumer confidence index ticked down to 82.2 from 85.3 in October. All the decline came from a sharp drop in consumers' view of their current condition. Expectations for the coming months improved.
No turnaround in confidence is likely in December, says the Conference Board's Lynn Franco, who predicts a lackluster holiday shopping season. The 3-point November drop is the shallowest in recent months.
The Conference Board's latest reading follows a survey last week by the University of Michigan showing consumer moods improving slightly.
The annualized rate of home resales in October increased to 5.17 million, up sharply from September, when the Sept. 11 attacks briefly brought the real estate market to a near halt. David Lereah, chief economist with the Realtors association, says the October number benefited from transactions delayed by the attacks.
Nonetheless, Lereah says, home sales continue on pace this year to produce the second-highest volume ever, trailing only the 5.21 million sales in 1999. He says the pace should hold up at least through March, propped up by the lowest interest rates in a generation.
The median or midpoint sale in October was $145,300, up 4.8 percent from a year earlier. And the supply of unsold homes on the market shrank in October to 4.5 months, down from 5.3 months in September.
Unlike what happened during the 1990-91 recession, when housing pulled down other sectors, real estate remains largely a footnote. Now, the market for expensive homes is off sharply from the late 1990s. But brisk demand for moderately priced homes has offset high-end declines, says John Karevoll of the market-tracking firm DataQuick.
