By Jane Hodges

The Investor: Dr. Roddy Tempest, 56, is an environmental scientist in Chapel Hill, N.C. He has invested in real estate since he was a student in the 1970s.  He typically purchases buildings where he can occupy one unit and rent out the others. He currently maintains four investment properties, including this one.

The property: The house is a Colonial Revival-style home in Durham, N.C. The property is listed on theNational Register of Historic Places because it was formerly the home of Richard E. Dillard, an early 20^th century businessman and architect. Located in Duke Park, a neighborhood near Duke University, the 4,071-square-foot home is set on a 0.45-acre corner lot. The property contains five units: Three one-bedroom, one-bathroom apartments; one one-bedroom unit with two bathrooms; and a small efficiency with a half bath and kitchenette. The apartments all include balconies.  

Purchase price: $5,000 in 1977. Dr. Tempest got the home for a fire-sale price, literally: The house was severely damaged by fire and was set for demolition, but Dr. Tempest convinced the property’s owners to let him buy the charred residence for $5,000, the value of the land. He then petitioned town officials to place a “stay” on the property, giving him a 90-day window in which to secure grants and a loan to rehabilitate the home.  

Additional investment: $123,500. Dr. Tempest invested $5,000 of his own money in the property and then secured a $100,000 rehabilitation loan, which he used to finance the conversion of the home from a large single-family property into a five-unit building. The funds subsidized installing separately metered electrical and plumbing lines for each unit and extensive plaster work. Dr. Tempest served as general contractor. He says since the home was rebuilt, he has spent about $18,500 on major renovation projects, which include replacing three HVAC systems (which averaged $3,500 apiece), reinforcing the home’s foundation ($1,000) and replacing gutters along the front porch’s columns ($7,000).

The five-unit investment property in Durham, N.C.

The strategy: Dr. Tempest began renting out the property in early 1979, as soon as its rehabilitation was complete. He has chosen to sell it now, he says, because he plans to build a new primary home for his family. This property’s historic status makes it popular with grad-student renters and he has a waiting list of interested renters, he says. He requires all tenants to carry renters’ insurance, naming him as a “third party beneficiary,” which cuts down on his property-insurance costs, he says.

The pitfalls: Buying a historic property can be time-consuming, Dr. Tempest admits. He says he personally enjoyed the challenges of rescuing and then operating the property as an investment. “What I’d warn people about is that they need to know what they’re getting into,” Dr. Tempest says, in terms of securing funding and maintaining an older building. The type of rehabilitation loan he secured required him to preserve the “historical integrity” of the property, he says, which meant his renovations had to respect the building’s original architecture. Of course, there are upsides to owning a historic property: Historic status means he pays only 50% of market-rate property taxes and that his property can’t be torn down to make room for roads or other public uses due to its historic significance, he says.

The transaction: Mr. Tempest found a buyer and expects to sell the home for $400,000 — $395,000 above what he paid to purchase it — in mid December.He’s consistently made $2,945 per month in cash flow (the profit from rental income after paying mortgage, mortgage insurance, insurance, taxes, and other expenses) for at least the past five years, Mr. Tempest says. He did not pay capital gains on the property due to other offsets with his investments, and he sold directly to another investor without incurring any real-estate agent commissions.

– Ms. Hodges is a free-lance writer in Seattle.

Email your comments to rjeditor@dowjones.com.

– November 30, 2006

As a weak housing market nudges the foreclosure rate higher, next year is looking promising for investors in distressed real estate.

So far, the U.S. housing slump hasn’t produced a bonanza for such investors, but lenders stuck with foreclosed property are becoming more inclined to slash prices or sell properties through auctions, industry experts say.

“We’re all going to have to be more creative in the next 12 to 24 months” in selling foreclosed homes, says Chad Neel, president and chief operating officer of Fidelity National Asset Management Solutions, a unit ofFidelity National Information Services Inc., Jacksonville, Fla. Mr. Neel’s company helps lenders manage and sell foreclosed homes.

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Williams & Williams Inc., a Tulsa-based auctioneer, says its sales of foreclosed homes will nearly double this year to about 5,060. Dean Williams, chief executive of the auction firm, expects another near doubling of sales in 2007.

Dallas-basedHudson & Marshall Inc. expects its auction sales of foreclosed properties to total about 4,800 this year, up 23% from 2005. David Webb, co-owner of the auction company, believes sales will rise at least 20% in 2007.

The auction firms say their busiest auction markets recently have included Michigan, Ohio, Indiana, Pennsylvania, Texas and Colorado. “Word on the street is that California, Florida and Arizona will also be very active in the next 12 months,” Mr. Webb says.

Lenders refer to foreclosed homes as REO, short for “real-estate owned.” They generally try to sell REO homes as quickly as possible to minimize holding costs, such as those for insurance, taxes and lawn care.

In the first half of 2006, REO properties accounted for 3.1% of all U.S. home sales, up from 2.4% two years earlier, according to a study by First American Real Estate Solutions, a unit ofFirst American Corp., Santa Ana, Calif. The study found that those homes sold at a median discount of 14% to their estimated value in the first half, compared with 12.5% two years before. The discounts reflect the gap between the actual sale price for the homes and the value estimated by a computer model, which takes into account sales of comparable homes nearby and price trends.

It has taken a while for foreclosures to mount. The housing boom of recent years reduced foreclosure rates because most people who fell behind on their loans could refinance or quickly sell their homes for at least enough to pay off the loans. At the end of this year’s second quarter, only about 1% of all home mortgage loans outstanding were in the foreclosure process, down from an average of 1.2% over the past decade, according to the Mortgage Bankers Association. Doug Duncan, chief economist for the mortgage bankers, expects a modest rise in foreclosures over the next year or two.

People with weak credit records who have taken out loans over the past year are falling behind on payments at a rapid clip, according to a recent report by mortgage analysts at UBS AG in New York.

Christopher Cagan, director of research and analytics at First American Real Estate Solutions, notes that REO sales are a lagging indicator of the housing market because at least a few months elapse between a borrower’s default and the foreclosure. Dr. Cagan expects a modestly higher foreclosure rate and deeper discounts next year.

Discounts are likely to be larger in areas where inventories of unsold homes have soared, such as in parts of Arizona and Florida, Dr. Cagan says. Another big factor in determining demand for REO homes is local job and population growth.

In Los Angeles County, which has strong housing demand and an extreme shortage of space, the median discount on REO homes was just 1.7% in this year’s first half. In Ohio’s Cuyahoga County, where job losses have left a glut of empty homes, the discount was about 30%.

Most REO homes are listed by real-estate brokers and sold like ordinary houses. But lenders often turn to auctions when they see their REO inventories piling up. Lenders that choose the auction route want to get “current market value, whatever it is, rather than sit on vacant property and speculate as to if or when it might sell,” says Mr. Williams of the Tulsa-based auctioneer.

One recent buyer at a Hudson & Marshall auction was Warren Russell, who bought a 1,300-square-foot home in Detroit for just $1,500. Mr. Russell says the home is structurally sound but needs new windows, paint and some other items. He expects to spend about $10,000 renovating the home and then rent it out.

In considering purchases of foreclosed homes, Mr. Russell says, “you can’t think, ‘Would I live here?’ There are people at every level of income that need a roof.”

Email your comments to rjeditor@dowjones.com.

– November 30, 2006

By Lauren Baier Kim

Here’s a look at what’s new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)

Record drop in home prices

The National Association of Realtors reports that sales of existing homes rose for the first time in eight months in October (0.5% from September), but the median home price fell saw its largest year-over-year decrease on record, from $229,000 in October 2005 to $221,000 last month. However, last month’s level of existing-home sales was above Wall Street expectations and NAR’s chief economist expects “more confidence in the market and a lift to home sales” by the first quarter of 2007, The Wall Street Journal Online reports.Click here for NAR’s full report.

Salem, Ore., had the fastest year-over-year increase for single-family home prices in the third quarter, according to an article by the Statesman Journal, which cites findings from the National Association of Realtors. Average home prices in the metro increased almost 25% to $228,000, the newspaper says. As a whole, cities that saw the greatest increases in price in the U.S. over the past year were those with job growth and more affordable prices, the paper quotes a spokesman for NAR as saying. Elmira, N.Y., saw the next biggest year-over-year price increase — 21.4% to $93,600, according to NAR. States showing significant increases in home sales included North Carolina, Texas and Montana, according to NAR. Click hereto view third-quarter median sale price info from NAR for existing homes.

The median sale price for homes along the New Jersey coast showed a year-over-year increase of 7.3% in the third quarter, says an article by Gannett New Jersey, which cites data from the National Association of Realtors. In the area that includes Monmouth, Ocean, Middlesex and Somerset Counties, the median sale price rose from $386,900 in the third quarter of 2005 to $415,100 for the same period this year, the article says. Median prices in several other New Jersey counties rose as well, the news organization says. However, the number of homes on the market is high and some homeowners are having difficulty selling their properties, the article says. Sluggish sales are forcing some people to take their properties off the market, Gannett New Jersey says.

Bargain hunters and real-estate speculators are buying up neglected cottages in East Nashville, Tenn., in neighborhoods like Cleveland Park, Maxwell Heights and McFerrin Park, says a Tennessean article. As a result, prices have risen in the area, with some buyers asking more than $300,000 for their homes — where “teetering Victorians” could once be had for less than $100,000, the paper says. However, interest in the market by investors and the like has resulted in a real-estate slowdown because first-time buyers can no longer afford local properties, the Tennessean says. “It’s gotten so expensive that it’s discouraging people [who] can’t afford to buy in, people [who] are making $30,000 or $40,000,” the paper quotes one area resident as saying. At least two East Nashville homes have sold for more than $500,000 this year — one is listed at $738,500 and another has an asking price of $1.5 million, the paper says.

Raleigh, when compared to other housing markets across the U.S., is relatively strong. In September, average resale prices there rose 3.4% from September 2005 to $229,687, says an article by the News & Observer. However, that increase was lower than August’s rise of 6%, the newspaper says. Although home prices are still up, sellers are finding that properties are taking longer to sell and are offering price cuts and incentives to entice buyers. In September 35% of homes listed through the area multiple-listing service were showing price cuts, the newspaper says. “We aren’t seeing as many bidding wars or multiple offers,” the paper quotes one local real-estate broker as saying. “It’s not the same market that it was in many ways.”

Join a reader discussion about the housing market.

Send links to articles about residential-real-estate markets to Lauren Kim at lauren.kim@wsj.com.

Email your comments to lauren.kim@wsj.com.

– November 29, 2006

By Lingling Wei

From The Wall Street Journal Online

As the number of foreclosures rises, homeowners unable to make their mortgage payments are facing another growing threat: “foreclosure rescue” scams.

State and federal authorities say they are investigating an increasing number of homeowner complaints about fraud and deception by companies that engage in lending to financially distressed borrowers seeking to avoid foreclosure. Several states have recently passed or are contemplating new laws to provide more protection against dishonest businesses trying to take advantage of already vulnerable homeowners.

Related Links

Mortgage Scams and How to Fight Back If You’ve Been Swindled

The problem centers on foreclosure-rescue companies, which target homeowners behind on their mortgage payments through newspaper ads or fliers claiming services such as “fast cash,” “equity funding” and “no credit check.” According to some recent cases filed by consumers and regulators, the companies mislead borrowers into believing they can save their homes from foreclosure in exchange for a transfer of the title for a year or two. The companies promise borrowers they can stay in their homes by paying rent for that period, giving them time to catch up financially until they can buy back their property. Often unknown to the borrowers, however, the companies may have sold their homes to a third party, stripping out the home equity and leaving the borrowers on the verge of eviction.

“More and more, we’re seeing some real sharks, pretending to be the homeowner’s best friend, but what they are after is the equity in the house,” says Arizona Attorney General Terry Goddard.

Foreclosure fraud has existed for a long time. But in recent years, experts and law-enforcement officials say, the schemes have grown increasingly complex, with scam artists often eyeing the chunks of equity that homeowners across the country amassed during the rapid housing-price appreciation from 2000 to 2005.

The scams are getting a boost as the housing boom fades and the numbers of past-due mortgage loans and foreclosures climb. Foreclosures historically have hit mainly homeowners with weak credit ratings. But now, a wider range of borrowers are struggling to pay off high-priced loans that lenders churned out during the boom. Online foreclosure-data service RealtyTrac says more than one million borrowers have seen their properties put in foreclosure so far this year, up 27% from the same period last year.

Statistics on the exact number of foreclosure-fraud cases filed are hard to come by as they are usually lumped together with mortgage fraud, which includes fraud against both lenders and borrowers. The Federal Bureau of Investigation estimates that mortgage fraud led to over $1 billion in losses in 2005, up from $429 million a year earlier. “We’re increasing our focus on mortgage fraud,” says Bill Stern, a supervisory special agent and mortgage-fraud coordinator at the FBI.

Alejandro and Martha Balderas tried for months to refinance their Chicago home and take it out of foreclosure after medical bills kept the couple from keeping up with their mortgage payments. They thought they had found their white knight when Platinum Investment Group LLC, a mortgage and real-estate investment company, promised the couple a loan against their house so they could pay off their mortgage and stay in their home, according to a complaint filed against Platinum in Circuit Court of Cook County, Illinois, by the state attorney general’s office.

The Balderases, in their early 40s, signed on in April 2005 — only to find out soon afterward that they had signed over their home to Platinum, which then sold it. Unable to keep paying “rent” to the company, they are now threatened with eviction, Ms. Balderas says. “It’s a nightmare and we’re reliving it every day,” she says.

The Illinois attorney general charged that Platinum duped homeowners into transactions that caused them to lose substantial equity in their homes and face eviction. Platinum has denied the allegations. A lawyer representing Platinum didn’t respond to requests for comment.

A total of 10 states have legislation in place to deter foreclosure-rescue fraud, including California, Georgia, Missouri, Minnesota, Maryland, Colorado, Rhode Island, New York, Ohio and Illinois, according to Creola Johnson, an associate law professor at Ohio State University.

A common feature among those laws is that they give homeowners the right to cancel the “rescue” transaction days before the closing. In addition, for instance, under the legislation passed in Illinois this year, if a company acquires any financial interest in a property in foreclosure and simultaneously leases the property back to the homeowner and gives the owner the option to buy it back at a later date, the acquirer, in certain cases, must pay the homeowner at least 82% of the property’s fair-market value at the closing of the purchase.

The goal of the payout requirements under the Illinois law, which goes into effect Jan. 1, is to ensure that distressed homeowners receive a substantial and fair amount of home equity when entering into leaseback transactions, while giving legitimate foreclosure purchasers a reasonable chance to profit.

Another common type of consumer complaint involves so-called foreclosure consultants, who, for an upfront fee, promise borrowers to negotiate with their lenders to postpone or avoid foreclosures. Illinois and several other states forbid foreclosure consultants from charging an upfront fee before performing the agreed-upon services.

Still, homeowners who find themselves duped into foreclosure scams often have a hard time recovering their losses, consumer lawyers say. For example, state law may not protect consumers if their houses are sold to third parties who claim they were unaware of any alleged fraud, according to a National Consumer Law Center report on foreclosure fraud.

Email your comments to rjeditor@dowjones.com.

– November 29, 2006

U.S. existing home prices dropped a record 3.5 percent last month, compared with the same month a year earlier, while the total number of residences sold fell 11.5 percent compared with October 2005, according to an industry report released yesterday.

Nationwide, the median price of a single-family home, condominium or cooperative apartment dropped to $221,000 last month from $229,000 in October 2005, according to a report by the National Association of Realtors, a trade group representing U.S. real estate agents. The median is the point at which half the homes sell for more and half for less.

New-home sales resumed declining in October, but the median price increased.

Meanwhile, the U.S. economy was stronger last summer than first thought because businesses accumulated more inventory and trade was less of a drag. Gauges measuring third-quarter inflation were lowered slightly, according to Wednesday’s data revisions.

Sales of single-family homes decreased by 3.2% to a seasonally adjusted annual rate of 1.004 million, the Commerce Department said Wednesday. September sales climbed 3.7% to 1.037 million, revised from a previously estimated 5.3% advance to 1.075 million. Sales increased 2.1% in August but fell 9.2% in July.

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The average price of a new home increased to $309,700 in October, up from $297,700 in September and $293,600 in October 2005, according to Commerce. The median price also rose, up to $248,500 last month from $218,200 in September and $243,900 in October 2005.

The sales numbers Wednesday were worse than what Wall Street expected. The median estimate of 23 economists surveyed by Dow Jones Newswires was a 2.3% decrease to an annual rate of 1.050 million in October.

Year-to-year, sales were down 25.4% since October 2005 as the housing market softens. Yet, in a glimmer of hope, the National Association of Realtors reported Tuesday sales of previously owned homes rose in October for the first time in eight months; still, year over year, sales were 11.5% lower.

New-home inventories receded in October. There were an estimated 558,000 homes for sale at the end of the month, the Commerce data Wednesday showed. That represented a 7.0 months’ supply at the current sales rate. An estimated 562,000 homes were for sale at the end of September, a 6.7 months’ inventory.

Financing costs drifted down in October. The average rate on a 30-year mortgage was 6.36%. It was 6.40% a month earlier — yet 6.07% in October 2005.

By region, new-home sales last month fell 1.7% in the South, 5.6% in the Midwest and 39.0% in the Northeast. Demand was 3.2% higher in the West. Based on figures unadjusted for seasonal factors, an estimated 77,000 homes were actually sold last month in the U.S., down from 82,000 in September.

GDP Revised Up

Gross domestic product increased at a 2.2% annual rate July through September, the Commerce Department said Wednesday in its first revision to third-quarter 2006 GDP. The government initially estimated growth at 1.6%.

GDP has weakened as the housing slump weights down the economy. Second-quarter growth was 2.6% and GDP raced ahead at a 5.6% pace in the first three months of 2006.

The government’s price index for personal consumption increased 2.4%, lower than the previously estimated 2.5% climb but below the second quarter’s 4.0% rise. The PCE price gauge excluding food and energy increased 2.2%, lower than the previously estimated 2.3% climb and below the second quarter’s 2.7% rise.

Corporate profits after taxes climbed 4.6% to $1.167 trillion in July through September from the second quarter, the report showed. In the second quarter, profits increased 0.3%. Year-to-year, profits surged 31.5% since the third quarter of 2005.

Revisions to inventories and imports were behind the adjustment to GDP, which is a measure of all goods and services produced in the economy. Wall Street expected a smaller upward revision to third-quarter GDP; the median estimate of 22 economists surveyed by Dow Jones Newswires was a 1.8% increase.

The revisions released Wednesday showed businesses increased inventories by $58.0 billion; originally, Commerce estimated a $50.7 billion increase. Companies had lifted stocks $53.7 billion in the second quarter.

The accumulation of goods added 0.16 percentage point to third-quarter GDP. Originally, Commerce said inventories subtracted 0.10 percentage point from GDP. Real final sales of domestic product, which is GDP less the change in private inventories, climbed 2.1%. The original estimate was a 1.7% increase. Second-quarter sales also rose 2.1%.

International trade was less of a restraint on GDP because imports didn’t climb as much as first thought, according to the revised data. U.S. exports rose by 6.3%. Imports increased 5.3%. Originally, exports were seen up 6.5% and imports 7.8% higher. So, trade reduced GDP by 0.21 percentage points; initially, Commerce said trade cut third-quarter GDP by 0.58 percentage points. In the second quarter, exports had gone up by 6.2% and imports climbed 1.4%.

Residential fixed investment, which includes spending on housing, plunged by 18.0% in the third quarter, a bigger drop than the originally estimated 17.4%. Second-quarter spending tumbled 11.1%. The 18.0% drop translated to a cut of 1.16 percentage points in third-quarter GDP, and it marked the sharpest fall since 21.7% in the first quarter of 1991.

Businesses increased third-quarter spending more than previously thought. Outlays rose 10.0% July through September, higher than the originally estimated 8.6% advance. Business spending rose 4.4% in the second quarter. Third-quarter investment in structures surged 16.7%. Equipment and software increased 7.2%.

Third-quarter spending by consumers increased 2.9%, down from a previously reported 3.1% but above the second quarter’s 2.6% advance.

Consumer spending accounts for the lion’s share of economic activity — about two-thirds. It contributed 1.99 percentage points to GDP in the third quarter; the original estimate was a contribution of 2.13 percentage points.

Purchases of durable goods rose 6.0% in July through September, below the previously reported 8.4% increase. Durables dipped 0.1% in the second quarter. Durable goods are expensive items designed to last at least three years, such as cars. Third-quarter non-durables spending increased by 1.1%. Services spending went 3.1% higher.

Federal government spending increased by 1.5%, revised down from an initially estimated 1.7% increase. Second-quarter spending fell 4.5%. State and local government outlays increased 2.6%.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, rose 2.1%, up from a previously estimated 2.0% climb but below the second quarter’s 4.0% rise.

The chain-weighted GDP price index rose 1.8%, unchanged from the first estimate but below the second quarter’s 3.3% rise.

Email your comments to rjeditor@dowjones.com.

– November 29, 2006

By Matthew Heimer

From The Wall Street Journal Online

After hurtling along for years, the nationwide real-estate boom has come to a screeching halt. In 2005, home prices in the U.S. rose more than 12%; this year, the National Association of Realtors expects appreciation to reach just 1.9% — the lowest gain since 1992.

Rising mortgage rates and selloffs by skittish real-estate investors have helped depress housing prices in many metropolitan areas. But there’s another factor that many observers miss: the relationship between home prices and incomes.

When the cost of housing in a given area grows far faster than local wages and salaries, the pool of potential buyers shrinks, and prices are much more likely to sink.

For the past five years, SmartMoney magazine has worked with Ingo Winzer, president of the consulting firm Local Market Monitor, evaluating home-sale prices against local income to determine whether a given market is overvalued, undervalued or fairly valued. Mr. Winzer relies on more than 15 years of housing and income statistics to find out where prices are headed.

According to Mr. Winzer, any market that’s more than 30% overvalued is due for a correction. In the fall of 2003, only eight markets on the list of 152 fit that description; on this year’s list, 37 did. Sure enough, price decreases are beginning to pop up in many of the markets that have shown up year after year as the most overvalued — especially in Florida and California.

What to do if you’re in a falling market? Obviously, that’s a promising climate for a bargain-hunting buyer. A savvy real-estate agent can help you craft a bid that’s low enough to save you money, but realistic enough to be accepted. When one of Frank Borges LLosa’s clients finds an appealing home, the Northern Virginia broker searches the history of the selling agent — data not available to consumers — on the local multiple listing service. If the agent frequently sells below the asking price, Mr. LLosa knows he can be aggressive.

Listing archives can also help buyers figure out the right bidding range. Ask your agent to comb the MLS for “pending sales,” deals that are in contract but haven’t yet closed, to get an up-to-date sense of price ranges in your market.

In an ideal world, you wouldn’t sell a house at all while prices were falling. But if you must, experts agree that it’s best to act quickly, before prices slide further.

Often, that means gritting your teeth and offering the best price to get potential buyers in the door. Here again, getting your agent to tap pending-sales data can pay off. Pay attention to the pricing per square foot for homes similar to yours, and set your asking price at the bottom of, or even below, that range.

South Florida broker Mike Morgan recommends that his clients take 1% to 3% off the price every week until they get an offer.

Another way to motivate a potential buyer: Motivate his broker. In a typical sale, a commission of 6% is split evenly between the buyer’s and seller’s agents. But you can ask that a higher percentage go to the buyer’s agent, or even offer extra money out of your own pocket, so that she’ll steer customers your way.

David Lereah, chief economist of the National Association of Realtors, expects that nationwide prices will bounce back in 2007.

He adds that one-third of the country is primed for growth — a claim that Mr. Winzer’s research supports. And if you don’t have to sell your home, the short-term turmoil underscores the point that it seldom makes sense to obsess over your home’s value the way you’d obsess over, say, your Google shares. Better to sit back, enjoy your mortgage-interest tax deduction, and wait for better days.

Email your comments to rjeditor@dowjones.com.

– November 28, 2006

Existing-home sales stopped tumbling and climbed for the first time in eight months during October, but prices made a record year-over-year drop. Meanwhile, declines in U.S. consumer confidence and durable-goods orders indicated more economic slowing is ahead.

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Join a discussion on the U.S. housing market.

Home resales rose to a 6.24 million annual rate, a 0.5% increase from September’s revised 6.21 million annual pace, the National Association of Realtors said Tuesday. September’s rate was originally estimated at 6.18 million.

The median home price was $221,000 in October, compared with a revised $221,000 in September and $229,000 in October 2005. It was the largest year-to-year decline ever and a record third consecutive decrease, NAR said.

NAR chief economist David Lereah said market fundamentals are improving. “After a period of price adjustment, we’ll see more confidence in the market and a lift to home sales should be apparent in the first quarter of 2007,” Mr. Lereah said.

The resales level last month was above Wall Street expectations of a 6.12 million sales rate for previously owned homes. The average 30-year mortgage rate was 6.36% in October, down from 6.40% in September, according to Freddie Mac.

By the end of October, the inventory of homes on the market rose to 7.4 months, compared with an unrevised 7.3 months at the end of September, NAR said. Regionally, existing-home sales were mixed. Sales rose 6.4% in the West but dropped 1.2% in the South and 2.9% in the Northeast. Sales were flat in the Midwest.

Email your comments to rjeditor@dowjones.com.

– November 28, 2006

By June Fletcher

Lots of people are looking for ways to make their holidays more meaningful by celebrating in a way that improves the environment — or at least doesn’t add to the piles of ripped-up wrapping paper, tossed-out cards and shriveled up pines that eventually end up on the curb. According to estimates from the California Integrated Waste Management Board, an extra million tons of waste are generated nationwide each week during the 10-week holiday season. But we’re not all budding Martha Stewarts with the time, talent and energy to make our own green decorations.

Here are five ways to have a green Christmas that don’t require skill with glitter or a glue gun:

Rethink how you wrap. Most commercial gift wrap makers don’t use recycled paper. Worse, some types of gift wrap, like foils, can’t be recycled after they’re used. So how can you save some trees and still have a tempting present? Simply folding and reusing gift wrap is one option — assuming your family doesn’t just tear into their presents. But even the most carefully folded paper tends to look creased and crinkled after a few seasons. So try using gift bags, or wrapping the tops and bottoms of boxes separately so the recipient doesn’t have to destroy the wrapping or bow to open it. Try using substitutes for store-bought wrapping paper, like old maps decorated with cast-off tape measures or colored string instead of ribbon or the funny pages (but only if your newspaper uses inks that don’t rub off on your fingers). Vintage napkins and table runners from yard sales also work well, or a thrift-store shirt topped with an old bow tie.

Related Links

More House Talk columns by June Fletcher

More Retailers See GreenWith Eco-Themed Decorations

Get out the shredder. Forget the Styrofoam peanuts; slivers of paper from your shredder make fine, fluffy packing material or filler for gift boxes. Shred pages from holiday catalogs or newspaper inserts — or even old CDs, if your shredder can handle them — to add a splash of color and shine.

Use live plants. The long-standing debate will probably never be resolved over whether fake trees or real ones — recycled after the holidays into mulch — are more ecologically correct. One way to circumvent the argument entirely is to buy a potted tree, and then plant it after the holidays. Nicole Hillis, a 27-year old government program analyst, uses a live potted tree each year that she and her apartment-mates adorn with homemade strings of popcorn and cranberries. “It sounds like we’re hippies, but we’re not,” she says. “We’re just looking for simple ways to reuse things.” Another idea, suggested by Washington, D.C. environmental activist and online eco-store owner Reena Kazmann, is to make centerpieces out of a collection of small pots of plants like poinsettias or rosemary. When your guests leave, give each one of the pots as a gift.

Green Christmas

Retailers are betting that consumers will want to deck the halls with environmentally friendly decor this holiday season. Read June’s piece on how companies are pitching decorations that with a eco-friendly theme.

Send recycled paper cards or e-cards. No one keeps track of how many of the two billion holiday cards sent each year are on recycled paper, says Barbara Miller, spokeswoman for the Greeting Card Association. But there seems to be a steady market for them: Chicago-based Recycled Paper Greetings has been selling them since 1971, while industry-leader Hallmark Cards Inc. has been seeing “consistent” sales of their recycled line, called Shoebox, for two decades. But since most cards aren’t made from recycled stock and aren’t recyclable, it makes sense to consider other alternatives. The easiest, at least for those family members who have email, is the e-card. Introduced about a decade ago, e-cards were first offered for free on greeting-card Web sites, and were wildly popular novelties. Soon, however, many companies started charging for them, and usage tapered off. About 20 paper cards are sent for each electronic card during the holidays, according to the Greeting Card Association, a ratio that’s held steady for the past four years. Nevertheless, many Web sites, including Hallmark, still offer free e-cards, though the recipient will have to sit through an ad first. Some also let senders personalize cards with family photos or write messages of unlimited length.

Decorate with found objects. You don’t need to be an artist to turn household items or collections into memorable decorations — you just need a little imagination and some bits of ribbon. Seashells, your son’s outgrown collection of tiny cars and trucks, and even kitchen cutlery can all be hung on a tree or worked into a wreath or garland. Eco-designer Danny Seo, author of Simply Green Giving (Harper Collins, 2006), is decorating his Christmas tree this year with his collection of antique teacups filled with candy and small toys. Using household objects decoratively is “cheaper and less aggravating” than fighting the crowds at the mall, he says. And because the results are quirky and unique, they also jump-start conversations at parties.

– June Fletcher is a staff reporter at The Wall Street Journal and the author of “House Poor” (Harper Collins, 2005). Her “House Talk” column appears most Mondays on RealEstateJournal.com. Email your questions about the residential real-estate market. Please include your name, city and state. If you don’t want your name used in our column, please indicate that. Due to volume of mail received, we regret that we cannot answer every question.

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– November 28, 2006

To understand why the housing slump hasn’t dragged the economy into a recession, it helps to visit the Smoketown Plaza in Woodbridge, where the thumping of hammers signals the healthy pulse of a building boom that’s still going strong.

Just two miles off Interstate 95, hard-hatted construction workers clamber up dusty ladders and scaffolding, hanging wallboard, laying bricks and drilling metal frames in a buzz of activity aimed at completing a new Arby’s drive-through restaurant in time to open by mid-December.