Wall Street Applauds Home Sales

Home sales were up 10.6% in October. They are up 33% since January. Wall Street is going up in part because of this.

I've heard lots of stories about bidding wars. I have a friend who spent six months looking for homes and bidding on them. Six months!

She finally bought one after spending hundreds of hours in the hunt.

Other bargain hunters are on the prowl.

The Washington Post reports:

The extension of the homebuyer tax credit should help sustain the housing market next year, economists said. Yet the overall economy will probably benefit only slightly from higher home sales.

There are still too many factors weighing down the recovery. Foreclosures are rising. Job creation is slow. People remain reluctant to spend. And construction of new homes – as opposed to sales of existing ones – plunged in October.

The biggest contribution the housing industry makes to economic growth is from home building. Commissions and fees generated from home sales also help, but far less than construction.

"I wouldn't want to bet the house on housing, really, in terms of the strength of the U.S. economy going forward," said Diane Swonk, chief economist at Mesirow Financial in Chicago."