General Market info

Existing-Home Sales Show Big Gain

Driven by the first-time buyer tax credit, existing-home sales showed another big gain in October with a strong up trend established over the past seven months, while inventories continue to decline, according to the National Association of Realtors®.

Existing-home sales — including single-family, townhomes, condominiums and co-ops — surged 10.1 percent to a seasonally-adjusted annual rate of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.

“Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” said NAR Chief Economist Lawrence Yun. “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.”

Now that the tax credit has been extended and expanded, potential buyers have until April 30 to have a contract in place. “There is still a large pent-up demand that can be tapped before the tax credit expires,” said Yun.

Total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes, representing a 7.0-month supply at the current sales pace, down from an 8.0-month supply in September. Unsold inventory totals are 14.9 percent below a year ago.

The national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.95 percent in October from 5.06 percent in September, according to Freddie Mac, adding that the 30-year rate recently dropped to 4.83 percent.