Existing Home Sales Jump To Highest Level In Over Two Years

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Existing home sales increased by much more than expected in the month of September, according to a report released by the National Association of Realtors on Friday, with first-time home buyers driving sales up to their highest level in over two years.

The report showed that existing home sales jumped 9.4 percent to an annual rate of 5.57 million units in September from a 5.10 million unit rate in August. Economists had been expecting a more modest increase to a 5.35 million unit rate.

With the bigger than expected increase, exiting home sales activity rose to its highest level since reaching a 5.73 million unit rate in July of 2007.

Lawrence Yun, NAR chief economist, said. "Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home."

"We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery," Yun added.

The increase in sales resulted in a decrease in total housing inventories, which fell 7.5 percent to 3.63 million existing homes available for sale at the end of September. This represents 7.8 months of supply at the current sales pace, down from 9.3 months of supply in August.

"The current housing supply is the lowest we've seen in two and a half years," Yun said. "If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year."

NAR said that the national median existing-home price in September was down 8.5 percent from the same month a year ago at $174,900, with distressed properties continuing to downwardly distort the median price.

Earlier this week, Senator Johnny Isakson (R-GA) testified before the Senate Banking Committee, arguing that there is a need to further restore the housing market and energize housing demand by extending and expanding the first-time home buyer tax credit.

Isakson said, "It is imperative that we retain the momentum we have gained as a result of the current credit and go into the spring market with the increased consumer confidence necessary for establishing a viable market."

He further said he plans to introduce an amendment to legislation extending unemployment benefits that would extend and expand the current home buyer tax credit.

This amendment would keep the amount of the credit at $8,000, but it would remove the first-time home buyer requirement, extend the tax credit until June 30, 2010, and raise the income limits to $150,000 for an individual or $300,000 for a couple.

Banking Committee Chairman Chris Dodd (D-CT) joined Senator Isakson in calling for an extension of the home buyer tax credit.

Existing home sales increased by much more than expected in the month of September, according to a report released by the National Association of Realtors on Friday, with first-time home buyers driving sales up to their highest level in over two years. The report showed that existing home sales jumped 9.4 percent to an annual rate of 5.57 million units in September from a 5.10 million unit rate in August. Economists had been expecting a more modest increase to a 5.35 million unit rate. (Market News Provided by RTTNews)