Home Sales mixed!

Home Sales, believed to be falling victim to higher rates andreduced affordability, printed a mixed bag of results for themonth of October. Existing Home Sales slipped by 2.7%, falling toa 7.09 million annualized rate of sale, still a very healthy clip,while sales of New Homes rocketed ahead by 13% to a new-record1.424m annualized sales rate. While it's true at the moment thatmortgages are somewhat more expensive than they've been for mostof the last three years, and prices are considerably higher,there's still enough demand (and mortgage liquidity) to keep homesales at very strong levels, even if records aren't likely tocontinue to fall. The Fed's regional survey of economic activity,called the "beige book" for the color of its cover, noted thatsome residential real estate markets had begun to cool somewhat inthe mid-October through mid-November period.On the topic of prices, the average price of a home is some 16%higher this October than last, according to the Federal HousingFinance Board. That figure is used to recast the conforming loanlimit each year, and single-family mortgages of up to $417,000 arenow eligible for purchase by Fannie Mae and Freddie Mac. Whilethis may help to improve Fannie and Freddie's market share,especially in coastal and other expensive markets, borrowers ofthat loan amount will find only about a $52 per month differentialin their mortgage payment from obtaining a conforming loan insteadof a jumbo loan. However, the $57,350 increase in the limit meansthere may be areas of the country where marginal jumbo mortgagemarkets will no longer need to exist, as loans can now beoffloaded to the traditional secondary markets.As October and especially November data begin to be revealed, it'sclear that the significant interruptions caused by HurricanesKatrina and Rita are fading into economic memory. Much of the mostrecent data points to a resumption of solid growth in the port-storm period. Estimates of GDP growth for 3Q05 were revisedconsiderably higher, where the preliminary estimate now has theeconomy running at a 4.3% clip, up from 3.8% in the advanceestimate.