Existing-home sales picked up slightly in October after home sellers slashed prices to create the largest year-over-year drop in median sale price in 40 years.
The National Association of Realtors says that sales of pre-owned homes increased last month by 0.5 percent.
The existing-homes sales report released this morning shows that Americans were buying homes at a seasonally adjusted annual pace of 6.24 million during October.
This is slightly more than the consensus estimate of economists (6.20 million), but the growth came at a price.
Broad-based price reductions are bringing buyers into the market.
Today's report shows that the median price of a home sold was $221,000 during October. That's 3.5 percent below the level from a year ago -- the biggest year-over-year price drop in the more than 40-year history of the report.
It's also the third month in a row where year-over-year price comparisons have been negative -- the longest stretch of prices drops that's been measured.
"After a period of price adjustment, we'll see more confidence in the market, and a lift to home sales should be apparent in the first quarter of 2007," said David Lereah, NAR's chief economist.
What's This Mean for Consumers?
If you're a buyer, it might be time to start looking for deals.
Sellers -- convinced that they had a unique gem that deserved a premium price -- are finally feeling the pinch of a market turn. They're lowering prices to get that coveted "Sold" sign out front.
Buyers and sellers alike are still enjoying a relatively benign interest rate environment.
According to Freddie Mac, a conventional 30-year fixed-rate mortgage now comes with a 6.36 percent interest rate, about the same rate as last year.
The housing industry is making lemonade out of lemons, spinning the real estate market situation as tied to your area's job market.
"It's an especially good market for sellers in areas with rising jobs and a growing population where prices remain moderate. Those are the areas now with the strongest price growth," said Pat Vredevoogd Combs, NAR president, in a prepared release.
"On the opposite extremes, about 10 percent of the country is experiencing economic weakness, and a fourth of the nation -- areas that had the biggest boom -- is in a correction that will take longer to balance. All of that is working to the advantage of buyers in today's market," Combs said.
Most analysts say prices will fall slightly until next year, thanks to a supply imbalance.
Today's report shows that the nation has a 7.4-month supply of pre-owned homes for sale.
That amount of "For Sale" signs makes it impossible to sustain high price growth -- there quite simply aren't enough buyers out there to bid things up.
Sometime next year, we'll likely see the supply fall below six months, which has historically supported moderate single-digit year-over-year price growth.