Highlights from yesterday's report on existing home sales:
1. Existing-home sales – including single-family, townhomes, condominiums and co-ops – surged 10.1% to a seasonally adjusted annual rate of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5% above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.
2. The inventory of existing homes for sale in October fell to 3.57 million homes, the lowest level in more than a year. At the current sales pace, there is now a 7.0 months supply of existing homes, which is the lowest level since February 2007, more than two and a half years ago (see top chart above). Compared to the peak of 11.3 months supply of inventory in April, October's 7.0 months supply represents a reduction of 4.3 months.
Bottom Line: The national real estate market is gradually recovering as the balance between the supply and demand (measured by the months supply of inventory) has returned to the 2006-2007 levels, suggesting that the worst is definitely behind us.