The National Association of Realtors said existing home sales fell 3% to a seasonally adjusted annual rate of 4.91 million. August data was revised higher to 5.06 million from an initially reported 5.03 million. The data reflects the tougher loan standards and newly imposed loan limits coupled with the still tough economic times and job uncertainty.

Harderr conforming jumbo loan limit rules went into effect in October, and a separate NAR survey of about 1,300 agents in areas that experienced lower loan limits showed that 16% of buyers dropped out of the home buying process. “People going from a 3.5% down payment to 20%, those are sizable,” Chief economist at the NAR said. Yun continued that may have played out in the Western region, where existing home sales dropped 8.8%.

The median price of homes dropped 3.5% from a year ago to $165,400. At the same time, 64% of agents report rents are rising, and a separate report from the Labor Department showed that rent of primary residences is up 2.1% on a year-on-year basis. Over time, rising rents should help boost sales of homes.

Distressed homes accounted for 30% of the existing-home market in September compared to 31% in August, with foreclosures accounting for 18% of the market. Inventories declined 2% to 3.48 million units, representing 8.5 months of supply at current sales rates.
Yun reiterated the housing market is pretty much in a holding pattern just waiting to break out. Yun believes when the breakout does happen, there is no where to go but up.

The National Association of Realtors is currently under a review of its benchmarking process which has taken longer than expected. Critics say the NAR statistics are overstated by as much as 20%.

Manufacturing in the Philadelphia region was showing signs of life according to the Federal Reserve Bank of Philadelphia in a report on Thursday.

The Philadelphia Fed’s diffusion index rose to 8.7 in October from negative reading of 17.5 in September. This is the first positive reading from the region in three months. Readings above zero indicate expansion in the manufacturing sector. The rise was much stronger than had been expected. Some economists had predicted a negative 10 reading.

The news was met with a sigh of relief by investors. Wall Street saw a 31 point jump on the news. This news comes after a shocking August drop to a negative 30.7 that raised concerns about a double-dip recession.

Earlier in the week, the New York Federal reserve bank released figures on its index with a very slight improvement.

The Institute for Supply Management reported that its key reading of the health of the manufacturing sector rose to 51.6 in September from 50.6 in August.
The Philadelphia Federal Reserve Bank also noted that companies were slightly more optimistic about future growth overall. Indicators for future activity strengthened moderately in October. The largest indicator of future manufacturing activity rose to 27.2 in October, up from 21.4 in September. This was the highest level in over six months.

The U.S. Labor Department is reporting new claims for unemployment benefits fell last week and a gauge of labor market trens hit a six month low. The data points to an improvement in the jobs market.

The Labor Department reported initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 403,000, from an upwardly revised 409,000 the prior week. Economists polled by the news agency Reuters had forecast claims falling to 400,000 from the previously reported 404,000.

In September, the economy generated 103,000 net jobs. That’s enough to calm recession fears, but it is far from what is needed to lower the unemployment rate, which stayed at 9.1 percent for the third straight month. Without more jobs and higher pay increases, consumers are likely to keep spending cautiously. Consumer spending accounts for 70% of economic activity.

The U.S. Labor Department employers laid off 1.66 million people in August. This number is down from July and far below the peak during the recession of 2.5 million.

Talks on the euro zone debt crisis plan have stalled as Germany and France are at odds over how to increase the effectiveness of the euro zone bailout fund. French President, Nicholas Sarkozy, is flying to Germany right now to meet with German Chancellor, Angela Merkel, in an effort to break the deadlock ahead of a summit set for Sunday.

The French government is arguing that the best way to leverage the European Financial Stability Facility is to turn it into a bank which would then access funding from the ECB. Both Germany and the ECB however oppose this.

Sarkozy told parliamentarians, “In Germany, the coalition is divided on this issue. It is not just Angela Merkel who we need to convince.”
These comments have many people worried that European leaders will not be able to agree on a clear plan on Sunday. If they can’t get something concrete together, the already fragile markets will continue to go lower.

Merkel warned that leaders would not be able to solve this crisis in one meeting. She also added, “f the euro fails, Europe fails but we will not allow that.”

The latest Moody’s downgrade fueled uncertainty of the euro zone’s future. Moody’s downgraded Spain’s credit rating by two notches and warned France that its’ triple-A rating could come under pressure. In Greece, workers staged the biggest strike in years to protest against austerity measures.

As Greek protesters pushed up to the steps of the parliament building setting fire to a sentry box occupied by the ceremonial guards who stand watch over the main symbols of the Greek state, the fervor of Greece’s fed-up people is clearer than ever. The Greek people have reached a boiling point.

Tens of thousands of people took to the streets in a two-day general strike against the Greek government and the imposed austerity measures. The mood was furious among demonstrators, fed up after repeated doses of austerity and increasingly hostile to both their own political leaders and international lenders demanding ever tougher measures to cut Greece’s towering public debt.

“Who are they trying to fool? They won’t save us. With these measures the poor become poorer and the rich richer. Well I say: ‘No, thank you. I don’t want your rescue’,” said public sector worker Akis Papadopoulos.

The clashes with police have overshadowed the start of a two-day general strike which shut down government departments, businesses and public services, as well as shops and bakeries. Flights in and out of Greece have been canceled.

Wednesday’s protests comes as European Union leaders scramble to outline a new rescue package in time for a summit on Sunday October 23. The EU ministers are hoping to agree to measures that will protect the region’s financial system from a potential Greek debt default.

“We are in an agonizing but necessary struggle to avoid the final and harshest point of the crisis,” Finance Minister Evangelos Venizelos told parliament. “From now and until Sunday were are fighting the battle of all battles.”