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Housing Stability?

You've got to love the realtors; no matter how bad the housing market gets, they're going to find that expert analysis that turns rough to rosy. Take today for example. The National Association of Realtors released its Pending Home Sales Index for the month of October. This index is based on contracts signed for existing homes, but not closings. The Monthly Existing Home Sales number is based on actual closings, and that's the one that really tends to move the markets. So today's number is more of a crystal ball kind of thing. The number isn't great, but the realtors claim the housing market is "stabilizing." (FYI, I relish the realtor/home builder "buzz word" for all these stat reports, and I'll be highlighting each as it comes in).

The Index for October shows a continued slide in sales, with the number of contracts signed 13.2% lower than October of 2005. Now here comes the rosy part. The percentage decrease, according to the realtors, is actually decreasing itself, meaning that something is beginning to press lightly on the breaks of this housing slide. David Lereah, the NAR's chief economists, and one of the most elegantly adept spin-masters I have ever known, said a fairly steady pace of home sales can be expected for the next two months.

"It's important to focus on where the housing market is now--it appears to be stabilizing, and comparisons with an unsustainable boom mask the fact that home sales remain historically high--they'll stay that way through 2007," says Lereah. "In addition, a temporary correction in prices distracts from the fact that it is primarily the number of home sales that affects the economy, and the number for this year will be the third highest on record."

Not bad David. Even Alan Greenspan has said that the housing slide's effect on GDP will soon be a memory. But there are others, plenty of them, who claim that the continued slip in home sales and prices, simply makes people feel less wealthy, and that affects their spending. If a word like "Stabilizing" helps, then so be it. Existing home sales did bump up a bit over 1% in October, despite the pending number being below a year ago, so maybe there are some new legs to this "Stability." Another word, however, being bandied about is "trough", but, so far, no one is willing to commit to that one yet.

Questions? Comments? RealtyCheck@cnbc.com

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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