CHARLOTTE, NORTH CAROLINA

From the Wells Fargo Economics Group

Home Buying Makes a Comeback
Existing home sales rose more than expected in November, as traditional buyers returned to the market. Overall sales rose 5.9 percent, with sales of single-family homes climbing 5.5 percent. Distressed sales fell to just 22 percent during the month, marking the smallest share since the recession.

The drop in distressed sales has sent home prices sharply higher, particularly relative to other broad price measures.

Demand for Homes is Outstripping Supply
Home prices are also being driven higher by unusually tight inventories. The inventory of homes available for sale fell to just a 4.8 month supply, which is the lowest since September 2005. The high proportion of homeowners with negative equity or near negative equity has effectively kept a large portion of homes off the market, while fierce bidding by traditional buyers has meant that many homes are selling above their asking price.