Home Sales Jump

By Renae Merle
Washington Post Staff Writer
Friday, October 23, 2009; 12:43 PM

Existing home sales jumped 9.4 percent in September to their highest level in two years, fueled by first-time home buyers pouncing on cheap prices and an $8,000 tax credit, according to industry data released Friday morning.

Sales of existing homes, including condos and single-family residences, reached an annual rate of 5.57 million units in September, their highest level since July 2007, according to the National Association of Realtors. That is better than what analysts were expecting and up 9.2 percent from the same period a year ago.

Sales were up throughout the country. In the South, which includes the Washington region, sales rose 9 percent last month.

"Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home," Lawrence Yun, the group's chief economist, said in a statement.

The $8,000 tax credit expires at the end of next month, and industry lobbyists are pushing Congress to extend and expand the program. Without it, the sales momentum could be derailed before the housing sector can make a substantial recovery, the industry argues.

"We would expect higher sales levels to persist through October and into November before collapsing in December if the credit is not extended," Adam G. York, an economist for Wells Fargo, said in a research note.

But some analysts have questioned whether the pickup in sales is being fueled by the tax credit or falling home prices and low interest rates. The tax credit may be pushing some potential buyers to purchase homes earlier than they otherwise would have, rather than generating new sales, they say.