Existing home sales rise but market still struggles

Sales of previously-owned homes continue to recover in the wake of the final expiration of the tax credits, rising for the third month in four.  But the 5.6% increase to a seasonally adjusted annual rate of 4.68 million units in November suggests the market continues to struggle.

As evidenced by the chart below, the dark bars represent the final month the tax credits were in place: the final day of November 2009 marks the last day to close on a home and still qualify for the first-time homebuyers tax credit and the final day of April 2010 marked the the last day to have a contract on a home. Hence, June 2010 might be a more accurate comparison.



In both cases, sales slipped, though the impact the second time around was more dramatic.

Sales have rebounded following the sharp drop in sales that followed the end of the credits but remain very near levels reached in early 2009.

Low interest rates and reasonable prices are providing some support, but factors such as tight credit, still-high unemployment and uncertainty over prices remain obstacles to a more robust recovery.