Existing-home sales in October rose to the highest level in more than two years, according to a report released Monday, driven by the popularity of a credit for first-time home buyers. The surge far outpaced expectations and nurtured hope that the stubbornly frail housing market might be on the upswing.
The article notes that quantities rose and prices fell. If we take a linear partial identification strategy, all that tells us is that the percentage change in supply of houses to be sold was greater than the percentage change in demand of houses. Far from heralding an "upswing" in housing market demand, we should read this as a relative increase in oversupply.