November 23rd, 2009 by Michael Oliver

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Sales of existing home sales surged in October to an annual pace of 6.10 million units the fastest pace in 2.5 years (February of 2007). Home sales were up 10.1% over September, which itself was a very good month for home sales compared to the past 3 years of weak home sale statistics. Analysts polled by Reuters had expected October sales to jump to a 5.70 million-unit pace from the previously reported 5.57 million units in September. Compared to October last year, home sales were up by a record 23.5 percent. U.S. stock indexes extended gains on the data, while Treasury debt prices were little changed. The surge in sales is mostly attributed to what was thought to be the end of the first time buyer tax credit National Association of Realtors Chief Economist stated:

“Many buyers have been rushing to beat the deadline for first-time buyer credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” said Lawrence Yun, NAR’s chief economist.

Distress sales showed 30% of all home sales and first time buyers made up 33% of all the sales for October. The high volume of distress sales still present in the market continues to weight down prices. Across the nation and in Tucson distress sales continue to hit the market and with those sellers needing to sell prices continue to be weak. However with the heavy demand hopefully those distress sales will continue to be moved through the market and get back to the more normal average (at least for Tucson, AZ) which is 5%-7% of all sales vs. the roughly 35%-45% that Tucson sits at currently.)

Across the nation home prices slid 7.1% from October of 2008. This marked the smallest decline is over a year. The average home price in the US is now at $173,100. Lawrence Yun also stated this:

“Existing home sales have already bottomed. Home prices are almost there. We are seeing a less of a decline in house values,” said Yun.

This statement I agree with as in Tucson as well as the rest of the US home sale rates are way up off of the bottom and once foreclosure sales are worked through the market should be very stable and prices should be back on the way up. Here are the rest of the October existing home sale stats.

Sales were up in all four regions of the country. Prices rose 1.1 percent in the Midwest, which didn’t see the same boom as the rest of the country, while declining in the other three. The rise in the Midwest was the first price increase in any region since November 2008.

Analysts are cautiously hoping a sustained housing market recovery will help to improve the psychology of households, which has been shaken by rising unemployment.

While the economy resumed growing in the July-September period after four quarters of decline, sluggish consumer spending is seen slowing the momentum.

The inventory of existing homes for sale in October fell 3.7 percent to 3.57 million units from the previous month, NAR said. At October’s sales pace, that represented a supply of 7.0 months, the lowest in 2-1/2 years, from September’s revised 8.0 months.