Sales of existing homes climbed in September to the highest level in over two years as homebuyers rushed to take advantage of a tax credit before it runs out.
Purchases jumped 9.4%, to a 5.57 million annual rate, more than forecast and following a 5.09 million rate in August, the National Association of Realtors said Friday.
The $8,000 credit for first-time buyers, due to expire Nov. 30, has probably pulled sales and construction forward, signaling housing may cool in coming months. While Congress is considering extending the incentive, factors such as lower prices and mortgage rates have also contributed to steadying the market.
Existing-home sales were forecast to rise to a 5.35 million annual rate, according to the median forecast of 76 economists in a Bloomberg News survey. Estimates ranged from 5 million to 5.6 million, after an initially reported 5.1 million rate in August. Resales reached a 4.49 million pace in January, their lowest level since comparable records began in 1999.
Purchases of existing homes were up 9.2% compared with a year earlier. The median price fell to $174,900, down 8.5% from a year earlier. It was the smallest decrease in 13 months.
The number of previously owned homes on the market dropped 7.5%, to 3.63 million in September. At the current sales pace, it would take 7.8 months to sell those houses, the lowest level since March 2007. A seven months' supply is usually consistent with stabilization in prices, the Realtors' chief economist, Lawrence Yun, has said in recent months.
The share of homes sold as foreclosures or otherwise distressed properties was 29% in September compared with 31% in August, Yun said.
Friday's report showed sales of existing single-family homes climbed 9.4%, to an annual rate of 4.89 million. Sales of condominiums and cooperatives increased 9.7%, to a 680,000 rate.
Purchases increased in all four regions, led by a 13% surge in the West. Purchases climbed 9.6% in the Midwest, 9% in the South and 4.4% in the Northeast.
Purchases of previously owned homes, which make up more than 90% of the market, are tabulated when sales close and therefore reflect contracts signed a month or two earlier.
Sales of newly built residences, which make up the rest, are counted when a contract is signed, and may therefore cool months before the tax credit expires.
Buyers must close before the Nov. 30 deadline to be eligible for the tax credit. Last month's sales were "heavily dependent" on the credit, Yun said in a press conference Friday. The Realtors' group and the National Association of Home Builders are lobbying to extend the credit on concern that demand will wane after it lapses.