Tuesday, February 27, 2007

Existing Homes Sales Increase 3%.

From Bloomberg:

Sales of previously owned homes in the U.S. rose more than forecast in January to a seven-month high as lower prices and warm weather brought out more buyers.

Purchases increased 3 percent last month to an annual rate of 6.46 million, up from a 6.27 million December rate that was higher than previously reported, the National Association of Realtors said today in Washington. Sales fell 4.3 percent compared with a year earlier.

The report suggests that housing, recovering from its worst slump in 15 years, may be less of a burden on growth this year, economists said. Cheaper homes and low borrowing costs are spurring sales, while a plunge in January housing starts reported this month shows builders are trying to reduce a glut of unsold properties.

First -- color me impressed (and a bit surprised).

I think a fair amount of this has to do with interest rates.

Here's a chart of the 10-year Treasury, expressed by the interest rate.

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A while back I observed the 4.85% was near a restrictive interest rate on housing. Notice that rates have been dropping since the beginning of the year, and now stand at 4.55%. That is good for housing.