September posted impressive gains nationally which was the largest monthly increase in the last 25 years as buyers tried to buy homes and close escrow before the new home buyers tax credit expires on November 30th.
The National Association of Realtors reported today that home sales rose 9.4 percent to a seasonally adjusted annual rate of 5.57 million in September after August posted a disappointing pace of only 5.1 million.
These numbers even beat Wall Street forecasts and that rate of sales was the strongest in two years. Economists had predicted that sales would rise to an annual rate of 5.35 million.
Sales are up nearly 24 percent nationally from their deepest lows in January.
As foreclosures and short sales continue to dominate the market, home prices continue to be sluggish. September posted a median price of $174,900 which is down close to 9 percent from the $191,200 price a year ago.
Based on current data, inventory of unsold homes on the market has fallen to about 7 percent to 3.63 million which is less than an eight-month supply at the current home sales pace and is the lowest level since spring of 2007.
Although sales rose nationally, the West did remarkably well where sales grew 13 percent from August. In Los Angeles, San Diego and Las Vegas foreclosure sales continue to dominate.
Furthermore, with low mortgage rates still available, first-time homebuyers as well as investors continue to buy homes.
With the deadline of the new home buyers tax credit just around the corner some home buyers are adding a clause to their contracts that allows them to back out if the sale if they are unable to close escrow by November 30th.
Even with the credit about to expire, many economists feel that both low mortgage rates and foreclosures will continue to be big contributors to the mini-boom that's currently going on in the housing market.
Joseph LaVorgna, chief U.S. economist at Deutsche Bank recently said, "We think the housing market has touched bottom and it is now only a matter of time until home prices stabilize - something that we anticipate to occur in late 2010."