Hot home sales pace sustainable?

October 25, 12:04 PMReal Estate News ExaminerBroderick Perkins

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Sales of existing homes nationwide jumped 9.4 percent in September and were up nearly 24 percent from the bottom of the market in January, according to the National Association of Realtors.

However, home buyers looking to beat the clock on the first-time home buyer tax credit's expiration date of Nov. 30, are credited with boosting sales -- much as car sales accelerated as the now-defunct "Cash for Clunkers" program petered out.

"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," said Lawrence Yun, NAR's chief economist.

Below 5 percent fixed-interest rates on conforming, 30-year mortgages have also helped generate sales.

Also, both buyers and a growing number of investors looking for bargains generated action in the more affordable, distressed market of foreclosures, short sales, and repossessed properties.

If the tax credit isn't extended and rates rise too much, it's uncertain if September's sales numbers are sustainable, given the still tight mortgage money market.

September's home buying activity beat economists' forecast for resale home sales to come in at an annual pace of 5.35 million last month. Annualized sales topped that at 5.57 million -- the best showing in two years -- up from 5.1 million in August this year and the same number in September a year ago, according to NAR.

The inventory of unsold homes fell nearly 8 percent to 3.6 million, little less than an 8-month supply and the lowest level since March 2007.

The median existing single-family home price was $174,900 in September, 8.1 percent less than a year ago.