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While existing home sales data was up in November, this is just part of the bigger housing market picture.

Existing home sales data showed an increase by 5.6 percent in November, according to data from the National Association of Realtors (NAR). Homes sales were 4.68 million as compared to 4.43 million in October. However, despite the increase, sales were still 28 percent lower year-over-year when compared to November 2009.

The year-over-year comparison is not entirely apples to apples, however, as home sales in late 2009 were inflated due to home buyer tax incentives giving the housing market a much-needed boost.

What Does the Existing Home Sales Data Report Say about the Health of the Housing Market

A more accurate indicator of housing market health than existing home sales data may be the fact that existing home sales have now risen in three of the past four months, resuming a growth trend since bottoming out in July of this year. NAR believes the housing market is in recovery mode and is likely to reach a more sustainable level in 2011.

NAR chief economist Lawrence Yun said in a statement, “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable…”

Yun added that home buyers are responding to improved affordability conditions.”The market is recovering and we should trend up to a healthy, sustainable level in 2011.”

This analysis may be somewhat optimistic when compared with some economists’ opinion that foreclosed and distressed properties will continue to flood the market in 2011, prolonging the stagnation in the US housing market, barring major intervention from the Federal Government.

“We thought housing would bottom in 2010, but it looks like it will take another year,” said David Wyss, the chief economist at Standard & Poor’s.

Distressed home sales accounted for 33 percent of all sales in November, compared to 34 percent in October. Nationally, housing inventory fell 4 percent last month to a level representing a 9.5-month supply at the current sales pace.

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