Existing home sales surge

WASHINGTON: Sales of existing US homes surged a record 9.4 per cent in September as Americans rushed to take advantage of a tax credit for first-time buyers before it expires next month.

Purchases rose to a 5.57 million annual rate, more than forecast and the highest in more than two years, the National Association of Realtors said on Friday in Washington. The median price fell at the slowest pace in a year as the number of houses on the market shrank.

While sales may cool unless Congress decides to extend the US$8,000 (US$1 = RM3.38) credit due to expire November 30, lower prices and mortgage rates have also made houses more affordable and may cushion any decline. Smaller price decreases show the market is stabilising as demand improves, easing the strain on consumer finances that deepened the worst recession since the 1930s.

"The excess supply of unsold homes has declined a lot and this reduces the downward pressure on home prices," said Harm Bandholz, an economist at UniCredit Global Research in New York.
"An improvement in house prices is an important condition for a rise in housing wealth and therefore higher willingness of households to start spending again."

By Bloomberg