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SCOTT JAGOW: We’re expecting to hear a familiar refrain about the housing market this morning: Home sales are still on the decline. The National Association of Realtors comes out with the numbers on existing homes for October. Forecasters predict sales will be down about six-tenths of a percent. That would be seven months in a row of falling sales. But on Wall Street, people seem to be saying, eh, so what? Marketplace’s Amy Scott explains.
AMY SCOTT: Some investors are betting the real estate market has hit bottom. They’re pouring money back into housing-related stocks like Home Depot and Fannie Mae.
Bloomberg reports home building stocks in the S&P 500 are up 24 percent since their low four months ago.
But economist Joel Naroff with Commerce Bank isn’t buying investor enthusiasm.
JOEL NAROFF: I think the market may have gotten a little bit ahead of itself.
Naroff says the housing market will correct itself only when prices get low enough to make people start buying again. And he says that hasn’t happened yet.
NAROFF: Until we see prices drop some more, especially in the existing housing market and inventory come back into line, we’re not going to see this market bottom. So this is a process that could go on for a good nine to 12 more months.
Tomorrow the government reports new home sales figures for October. Naroff estimates those sales dropped by one percent.
In New York, I’m Amy Scott for Marketplace.
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