Economy Watch: Existing Home Sales Up in November
- Dec 22, 2011
The National Association of Realtors reported on Wednesday that existing home sales rose again in November compared with October and with the same month a year ago. The month-over-month increase was 4 percent to an annualized rate of 4.42 million units in November, up from 4.25 million units in October. The year-over-year difference was a 12.2 percent increase over the 3.94 million-unit pace in November 2010, but at that time the market still had a lingering hangover from the homebuyer tax credit.
The organization also reported that the national median existing-home price for all housing types was $164,200 in November, down 3.5 percent from a year ago. Distressed homes–foreclosures and short sales–have captured about a third of the market. They accounted for 29 percent of sales in November (19 percent were foreclosures and 10 percent were short sales), compared with 28 percent in October and 33 percent in November 2010.
The Realtors also released the organization’s revision of its existing home sales data since 2007. So as bad as home sales seemed during the years of the Great Recession, they were actually worse. For the total period of 2007 through 2010, U.S. sales and inventory were downwardly revised by 14.3 percent by the NAR. In 2010, the most recent year for which there are full statistics, the organization now says there were 4,190,000 existing-home sales, a 14.6 percent revision from the previously reported 4,908,000 sales.
Bank of America settles another countrywide mess
Bank of America has agreed to pay the government $335 million to settle allegations that Countrywide Financial, which the bank so astutely bought back before the housing crash, discriminated against black and Hispanic borrowers during the boom times of the mid-2000s. Naturally, the bank is admitting no such thing, but it will be ponying up the largest fair-lending settlement ever to make the charges go away.
The U.S. Department of Justice has been investigating the matter for some time, after Illinois Attorney General Lisa Madigan first sued the bank in 2010 over its lending practices (that suit was also settled on Wednesday). One example of Countrywide’s discriminatory practices uncovered by the Justice Department was, in 2007, charging Hispanic mortgage applicants in metro Los Angeles an average of $545 more in fees for $200,000 mortgages than white applicants with similar qualifications.
More fundamentally, Countrywide—which originated subprime mortgages back in the day the way McDonald’s originates hamburgers—let its brokers steer would-be borrowers to subprime products, even if they qualified for standard mortgages. Turns out, according to the Justice Department, black and Hispanic applicants whose qualifications were equivalent to white applicants were nevertheless steered in that direction much more often than white applicants.
ECB makes cheap loans, representatives have egg on faces
European banks responded with eagerness to the European Central Bank’s offer of low-cost loans, which kicked off on Wednesday. Some 523 banks, in fact, took the opportunity to take three-year loans at 1 percent from the ECB. The idea is that some of the banks will lend some of that windfall to stimulate the economies of Europe, or gamble on Spanish and Italian bonds, to make a killing at 5 percent to 7 percent (provided those countries don’t stiff their creditors). But there’s another possibility—that they will take the money and sit on it, as many U.S. banks did with their TARP infusions.
Most members of the U.S. House of Representatives have gone for the holidays, and all of the U.S. Senate has, leaving the House leadership to hold the bag in the public relations battle going on between the parties and among the Republican party. The Senate’s strategy (laying low, letting the House stew) seems to be working. Even the Wall Street Journal—not known to side against the Republican Party all that often—took House Republicans to task on Wednesday in an editorial called “The G.O.P.’s Payroll Tax Fiasco.”
Wall Street passed a mostly lackluster day on Wednesday, ending mixed. The Dow Jones Industrial Average was up a scant 0.03 percent, while the S&P 500 rose 0.19 percent. The Nasdaq was down 0.99 percent for the day.