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Existing-home sales soar 23.5% in October

Propped up by government tax credits, existing-home sales exploded in October, the National Association of Realtors said yesterday. Sales were 23.5 percent higher than in October 2008 and 10.1 percent greater than in September. This was the highest pace of selling activity since February 2007, just as the housing boom was winding down nationally.

A sign advertises a home for sale in Philadelphia. An upbeat report on national sales helped the Dow to a 13-month high. Story, C4.
A sign advertises a home for sale in Philadelphia. An upbeat report on national sales helped the Dow to a 13-month high. Story, C4.Read moreMATT ROURKE / Associated Press
    by By Alan J. Heavens, Inquirer Real Estate Writer
    Published 

Propped up by government tax credits, existing-home sales exploded in October, the National Association of Realtors said yesterday.

Sales were 23.5 percent higher than in October 2008 and 10.1 percent greater than in September. This was the highest pace of selling activity since February 2007, just as the housing boom was winding down nationally.

The median existing single-family home price was $173,100 in October, down 6.8 percent from a year ago, the NAR said.

The Philadelphia region's sales numbers, reported Nov. 13, were even better than the nation's, rising 25.8 percent year over year, according to Prudential Fox & Roach HomExpert Report.

The median price was $202,000, down 6 percent from $214,900 in October 2008, HomExpert reported.

Again, the gain regionally was attributed to the rush by qualified first-time buyers to be eligible for all or part of an $8,000 tax credit that was to have expired Nov. 30.

The rush of buyers was intensified during October by wrangling in Congress over extending and expanding the credit into 2010.

"The government learned the joys of bait-and-switch as the prospect of the first-time buyers' subsidy ending, which it didn't, caused almost panic buying," said economist Joel L. Naroff, president of Naroff Economic Advisors in Holland, Bucks County.

The extension, which begins Monday and ends April 30, continues the $8,000 tax credit for first-time buyers. For other home buyers, it adds a $6,500 credit for those who have lived in their houses for at least five years. It also increases income limits.

The report was much better than expected, but economists do not expect the pace to be sustainable.

"We really shouldn't start to believe the housing market is in great shape again," Naroff said, calling the surge temporary as people raced for the credit.

Patrick Newport of IHS Global Insight projects that "sales will drop in the first quarter of 2010, payback from the first tax credit."

"Sales will take a second hit in the third quarter of 2010, payback from the second tax credit," Newport said. "Overall, sales in 2010 will be about the same as in 2009."