Existing home sales surge 9.4% in September
* Existing home sales jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units from 5.09 million in August. That was twice the gain that was expected and the rate of sales was the highest since July 2007.
* Single-family sales gained 9.4%, while condo and cooperative sales rose 9.7%. By region, sales climbed across the board. They were up 4.4% in the Northeast, 9% in the South, 9.6% in the Midwest, and 13% in the West.
* The raw number of homes for sale dropped 7.5% to 3.63 million units from 3.924 million in August. Supply was off 15% from a year earlier. The months supply at current sales pace indicator of inventory dropped to 7.8 from 9.3. Single family inventory dropped to 7.6 from 9, while condo inventory fell to 11 from 12.1.
* The median price of an existing home fell 1.4% to $174,900 from $177,300 in August. That was off 8.5% from $191,400 in the year-ago period.
September was a blockbuster month for existing home sales. The looming expiration of the tax credit, combined with stabilization in the broader economy and cheap home prices, drove sales to the highest level we've seen in a couple of years. The supply of used homes for sale is also steadily declining, an encouraging trend considering that new home inventory has already dropped like a rock.
If there's a fly in the ointment, it's concern about the "pull forward" effect. Clearly, some buyers purchased a home this summer because of the tax credit and the tax credit alone. Unless that credit is extended or expanded, we'll see "give back" in the coming couple of months. I don't think it derails the overall recovery. That's being driven by true, fundamental forces, such as the dramatic improvement in housing affordability. But it will be noticeable nonetheless.