Sales of existing homes rose to their highest level in more than two years, as first-time buyers were spurred on by a big tax credit, the National Association of Realtors said Friday.
Sales surged 9.4 percent to a seasonally adjusted annual rate of 5.57 million in September, down from a downwardly revised pace of 5.1 million in August. The latest figure represents the biggest jump since July 2007.
Most economists had forecast annual sales of just 5.35 million homes.
Even so, "we are not there in terms of removing the consumer fear factor," warns Lawrence Yun, NAR's chief economist.
Robert Dye, a senior economist with PNC Financial Services Group of Pittsburgh, said it was "a breakout month" for home sales but expressed concern that if Congress does not renew the $8,000 tax credit for first-time homebuyers, the market could experience a renewed shock.
"Be excited that a lot of houses got sold. That's obviously a good sign," he told NPR. "But also, there's a calling here for a note of caution in this report that we're not out of the woods yet."
The median sales price fell 8.5 percent from the same period a year ago, to $174,900, but that was the smallest year-on-year drop in 13 months. It was down from $177,300 in August.
The inventory of unsold homes on the market also shrank, about 7 percent to 3.63 million. That means the backlog of unsold homes was down to a 7.8 month supply, its lowest level since March 2007.
Thomas Popik, who conducts a monthly survey of real estate agents for Campbell Communications, a research firm, said there's a "miniboom going on" in the housing market.
But many economists still worry that as unemployment continues to rise more foreclosures will come on the market.
The West saw a 13 percent rise from August as cities including Los Angeles, San Diego and Las Vegas experienced a boom in sales on foreclosed homes.
Housing sales bottomed out in January, and nationwide sales have climbed back nearly 24 percent from that low, but they're still down 23 percent from four years ago.
From NPR and wire service reports
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