Sales of existing homes, boosted by the first-time buyer tax credit, posted a sharp, 10.1% gain in October from the previous month, the National Association of Realtors (NAR) reported.
Existing-home sales, including single-family, townhome, condominium, and co-op units—rose to a seasonally adjusted annual rate of 6.10 million units in October from a downwardly revised pace of 5.54 million in September. Existing-home sales are 23.5 percent above the 4.94 million-unit level of October 2008, and sales activity is at its highest pace since February 2007, when sales hit an annual rate of 6.55 million, NAR said.
NAR Chief Economist Lawrence Yun said he was surprised at the size of the gain. “Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” he said. “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.”
With the first-time buyer tax credit extended and expanded, potential buyers have until April 30 to have a contract in place. Historically low interest rates also are boosting the market, NAR said. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.95% in October from 5.06% in September; the rate was 6.20% in October 2008. Last week, Freddie Mac reported the 30-year rate dropped to 4.83%.
Total housing inventory at the end of October fell 3.7% to 3.57 million existing homes available for sale, which represents a 7.0-month supply at the current sales pace, down from an 8.0-month supply in September. Unsold inventory totals are 14.9% below a year ago. “The supply of homes on the market is now at the lowest level in over two-and-a half years,” Yun said. “We’re getting closer to a general balance between buyers and sellers.
“In the second half of 2010, if home values show consistent stabilization or even a modest increase, then home sales could remain at normal healthy levels because consumers would no longer be worried about a price overcorrection,” he said.
Single-family home sales rose 9.7% to a seasonally adjusted annual rate of 5.33 million in October from a pace of 4.86 million in September, and are 21.4% above the 4.39 million-unit pace in October 2008.
Existing condominium and co-op sales surged 13.2% to a seasonally adjusted annual rate of 770,000 units in October from 680,000 in September, and are 40.8% above the 547,000-unit level a year ago.
Regionally, existing-home sales in October rose 11.6% in the Northeast, and were 27.7% higher than October 2008; sales in the Midwest rose 14.4%, and were 28.8% above a year ago; sales in the South rose 12.7%, and were 25.7% higher than October 2008; and in the West, sales rose 1.6%, and were 12.0% above a year earlier.