Existing property sales in the US soared in October with experts predicting further increases before they fall off for the winter season.
Sales increased 10.1% in October, the figures from the National Association of Realtors show. They are now 23.5% higher than they were a year ago and at their highest rate since February 2007.
NAR chief economist Lawrence Yun credited the increase to a last minute push from first time buyers trying to close a deal on a home to take advantage of tax credits which were set to expire at the end of November but which have now been extended until April Next year.
As a result he expects sales to rise again during November before declining measurably in December and early 2010 and then rising again in spring and early summer.
A lack of supply has also contributed to the strong sales figures. The nation’s inventory of existing homes decreased 3.7% to 3.57 million, representing a seven month supply of homes at the current pace, down from an eight month supply in September. Unsold inventory is now down 14.9% from the same time last year.
‘The supply of homes on the market is now at the lowest level in over two and a half years. We’re getting closer to a general balance between buyers and sellers,’ Yun explained.
Low prices, along with historically low mortgage interest rates are also fueling the increase in sales, Yun added, but he warned prices could increase in 2010.
‘With the abnormal drop in home prices over the past few years, the price-to-income ratio has fallen below the historic trend line. This is adding to the buying power of the typical family, with affordability conditions this year at the highest on record dating back to 1970, but prices are beginning to flatten and are poised to rise next year,’ Yun said.
The single family segment of home sales increased 9.7%, while the condo and co-op segment was up 13.2%. Existing sales in the Midwest increased 14.4%, leading all regions of the country in October, followed by a 12.7% increase in the South, 11.6% in the Northeast and 1.6% in the West.