Existing Home Sales Jump 9.4 Percent in September

The National Association of Realtors (NAR) reported existing home sales shot up 9.4 percent to a seasonally adjusted annual rate of 5.57 million in September, up from a level of 5.10 million in August.

Sales activity is the highest it has been since July 2007.  Existing home sales include single-family, town homes, condominiums and co-ops.

Low mortgage rates and the $8,000 first time home buyer tax credit are driving existing home sales higher. The tax credit ends November 30, 2009 unless Congress extends the credit. The NAR is lobbying Congress hard to extend the tax credit. The NAR also has a “Call for Action” page that real estate agents can use to email their senator and congressperson to urge them to extend the tax credit.

Another positive sign in the report is that the supply of homes for sale at the end of September fell 7.5 percent to 3.63 million. This represents a 7.8 month supply at the current sales pace, down from an 9.3-month supply in August. Unsold home inventory totals are 15.0 percent below a year ago. When the supply of homes comes down to a more historical norm, housing prices will stabilize.

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

On the negative side, the national median existing-home price for all housing types was $174,900 in September, which is 8.5 percent lower than September 2008. Foreclosures and short sales continue to drive the median home price down.