Home Sales Up 10 Percent in September

By:: Peter King | October 25, 2010

Existing home sales rose 10 percent in September, a second consecutive monthly increase although the housing market remains weak overall.

Home sales increased to a seasonally adjusted annual rate of 4.53 million, up from a downwardly revised 4.12 million in August, according to figures released today by the National Association of Realtors. The gain is considerably stronger than predicted, with most analysts forecasting sales in the 4.25 million – 4.30 million range.

Despite the sharp increase, sales remain relatively weak; the figure represents a 19.1 percent annual decline from the September 2009 level of 5.60 million.

“A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium,” said Edward Yun, NAR chief economist.” But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions.”

Median homes prices fell for the third consecutive month, to $171,700, which represents a 2.4 percent annual decrease from September 2009. However, the inventory of homes for sale, which typically influences prices, shrank to a 10.7 month’s supply, down from a 12.0 month’s supply in August.

The NAR estimates there are currently 4.04 million previously owned homes for sale, including single-family homes, condominiums and townhouses. That’s an increase of 8.9 percent from September 2009.

The housing market continues to suffer a hangover from the end of the homebuyer tax credit program last spring. Home sales fell off sharply in July following the end of the credit and are struggling to regain their footing despite record-low interest rates and low housing prices.

The tax credit gave sales a strong boost, but apparently did so by pulling sales forward from later months, motivating prospective buyers to purchase sooner than they otherwise might have. Existing home sales peaked at an annual rate of 6.49 million in November 2009, just before the originally scheduled deadline for the credit, then picked back up again to 5.79 million in April 2009 before the extended deadline, but fell off shortly thereafter, plunging to 3.84 million by July before beginning to move up again.

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