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Existing-Home Sales Expected to See Improvement in December

forecastA new forecast of existing-home sales for the month of December has projected activity rising but still finishing the year on a low note after a weaker than expected November.

In its latest Nowcast projections, online real estate auction company Auction.com calls for pre-owned home sales to fall between seasonally adjusted annual rates of 4.79 and 5.18 million for December, with a targeted number of 4.98 million.

The company's forecast comes just one day after the National Association of Realtors (NAR) reported that existing-home sales in November were at an adjusted annual rate of 4.93 million, 6.1 percent down from October and well below Auction.com's forecast of 5.25 million.

Peter Muoio, chief economist for Auction.com, explained that outside influences were responsible for dragging home sales down past the lower scope of the company's range.

"This apparently anomaly required a closer look at possible outside factors that the [Nowcast] model wasn't able to account for, such as a slowdown in purchases late in the month due to inclement weather, or the potential for November predictions to be skewed somewhat by the unexpectedly strong momentum coming out of October," Muoio said.

NAR cited a number of factors in November's decline, including tightening inventory, diminishing investor activity, and rising home values pushing more and more properties out of homebuyers' reach. Auction.com EVP Rick Sharga pointed to many of the same issues, also bringing up unexpectedly harsh weather conditions in the Midwest and Northeast.

"In a month where consensus forecasts were all too optimistic, we are reminded that the housing market is recovering in fits and starts, and there remain significant headwinds," Sharga said.

As the housing market prepares for what 2015 might bring, Auction.com's research department says strengthening first-time homebuyer numbers and increasing household formations will help normalize demand among non-investors.

Meanwhile, continued strengthening in the labor market "suggests a firmer basis for demand heading into 2015, while lower mortgage rates and ongoing initiatives to improve mortgage accessibility could motivate more prospective buyers to enter the market," the company said.

If Auction.com's forecast holds out, December sales will come in 2.2 percent above year-end 2013, marking the third straight month of annual improvement.

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
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