by Calculated Risk on 11/28/2005 10:04:00 AM

A few comments for October:

Existing Home Sales fell 2.7% to 7.09 million annual rate.

Inventories increased 3.5% to 2.87 million. This represents 4.9 months of supply. Although inventories are at record levels, the months of supply is still within the normal range because of the strong sales activity.

Inventories are up 16.3% since last October.

Both median and average prices were solid and rebounded from last month. The median prices was $218K, up from $213K in September and just below the record set in August of $220K.

The average price $267K, up from $261K, and just below the August record of $269K. Prices are not seasonally adjusted and it is normal for prices to fall a little from the summer peak.

The AP reports: Existing Home Sales Decline in October

"This signals that the housing sector has likely passed its peak. The boom is winding down to an expansion," said David Lereah, chief economist for the Realtors.
...
Lereah predicted that housing activity would cool further in coming months if, as expected, the Federal Reserve keeps pushing interest rates higher to combat rising inflation pressures that have been triggered by a surge in energy prices.

Those price increases have contributed to a rise in mortgage rates although rates retreated a bit last week to 6.28 percent from 6.37 percent the previous week, which had been the highest level in two years.

"We feel confident that housing is landing softly as rates continue to rise," Lereah said.

Some economists had expressed fears that rising mortgage rates could burst the housing bubble much as a speculative bubble in Internet stock prices burst in early 2000, sending shockwaves throughout the economy.

Mortgage rates have fallen for two consecutive weeks and might fall further this week. For an interesting discussion on the flattening yield curve, see Dr. Hamilton's: Inverted yield curve edges closer