Existing home sales inch up in October

We just got our latest look at existing home sales from the National Association of Realtors. Sales rose 1.4% to a seasonally adjusted annual rate of 4.97 million in October from 4.9 million a month earlier. That topped expectations for a reading of 4.8 million. We saw strength in most of the country, with sales up 2.1% in the South, 2.8% in the Midwest, and 4.4% in the West. Sales fell 5.1% in the Northeast.

Single family transactions led the way with a gain of 1.6%, while condo and coop sales were flat on the month. The supply of homes for sale dipped to 3.33 million from 3.406 million in September. That was equal to 8 months of supply at the current sales pace, down from 8.3 a month earlier. Meanwhile, the median price of a used home fell to $162,500 from $165,800 in September. That was also down 4.7% from a year earlier.

The housing market is showing a slight improvement in tone these days, with builder optimism and now, used home sales perking up. Strength was broad based in October, led by the core single-family market. That said, we're still talking about a low level of activity overall. Pricing also remains weak, and distressed inventory continues to find its way into the market courtesy of an ongoing wave of foreclosures.

We also have to watch the credit markets closely. The European chaos is spreading into more and more corners of the banking sector and capital markets. That could lead to tightening credit standards in the mortgage market, exactly what potential home buyers DON'T need right now.