Starts, new homes up in Nov.

Don Hogsett, Staff Staff, January 6, 2003

Working on an 11th hour rally, the broad U.S. housing market staged a partial recovery during November, with housing starts and new home sales both edging higher as the big market for sales of existing sales gave up some of the prior month's big increase.

Existing home sales, which account for almost 70 percent of all the nation's housing activity, slipped by 3.5 percent in November, to a seasonally adjusted level of 5.3 million units, giving up some of the hefty 6.1 percent increase it put up during October.

With contractors and developers betting that consumers' appetite for new homes will carry over into 2003, housing starts ticked up by 2.4 percent in November, to a seasonally adjusted 1.6 million units. That took some of the sting out of the prior month's big 11.4 percent decline as developers took a breather from a blistering pace in October.

New home sales, a highly volatile market subject to frequent monthly revision, jumped up by 5.7 percent after falling 4.5 percent the prior month.

David Lereah, chief economist for the National Association of Realtors, said the November correction in sales of existing homes was not unexpected. "Our projections indicate existing-home sales should be fluctuating at a pace in the range of 5.2 to 5.4 million for the coming year, so it's no surprise to see sales coming off of the spike in October." Even given the November dip, he said, "for all of 2002, we'll easily surpass the record of 5.3 million sales in 2001, with sales topping the 5.5 million level."

The national median price for an existing home was $161,400 in November, up 9.7 percent from the year-before level of $147,100. Housing inventory levels at the end of the month rose 1.3 percent , to a total of 2.34 million existing homes available for sale, a 5.1 month supply at the current sales pace.

Driven by the best financing conditions available in decades, sales of costly new homes jumped up by 5.7 percent form October, the Commerce Department reported, setting a record of 1.07 million units. Gains were concentrated in the Midwest, where a stunning 41.2 percent increase more than offset October's 17.1 percent decline. The South, the nation's largest housing market, put up a 2.4 percent gain, while the Northeast lost ground by 26.7 percent, hindered by an early snowstorm, and the west showed a decline of almost 4 percent.

Housing by region
Month-to-month % change

Existing home sales Housing starts New home sales
Northeast -12.3% -5.6% -26.7%
Midwest -10.8 -10.9 41.2
South -9.0 -10.1 2.4
West -10.9 -11.9 -3.9

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