Existing home sales rise in October

The National Association of Realtors recently reported that existing home sales in October increased as the number of houses on the market declined. Total sales of existing homes grew 1.4 percent to a rate of 4.9 million in October compared with September, and 13.5 percent above October 2010 levels.

Contract failures and cancellations caused by declined mortgage applications, failed loan underwriting from appraisal values, and other issues with home inspections and unemployment are preventing home sales from increasing more to incite a recovery, the group said.

"A higher rate of contract failures has held back a sales recovery," said NAR chief economist Lawrence Yun. "Contract failures reported by NAR members jumped to 33 percent in October from 18 percent in September, and were only 8 percent a year ago, so we should be seeing stronger sales."

In an interview with Bloomberg, Sal Guatieri, senior U.S. economist at BMO Capital Markets, said the housing market has a long road to recovery.

"There are still a lot of depressed properties in the pipeline that will hit the market, and demand likely needs to strengthen above a 5 million annual rate to absorb the overhead of unsold homes and alleviate the downward pressure on prices," Guatieri said. 

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