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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Sept. existing home sales jump 9.4%

Sales of existing homes took a big, surprise jump in September, rising 9.4 percent compared with August, reaching their highest level since July 2007, according to the National Association of Realtors in numbers released moments ago.

Sales dropped 2.9 percent in August compared with July.

The median home price remained depressed compared with last year, however, which goes a long way toward explaining the sales surge. At $174,900, it's down 8.5 percent compared with this time last year. That, however, is the smallest year-over-year price decline in 13 months, suggesting a bottoming in housing prices may be coming.

Of course, sales have been goosed by the $8,000 first-time home buyer credit, which expires at the end of next month, unless it's extended by Congress.

Also, this is a cheap-house surge. Expensive houses are still not selling. Check out the data: 21 percent of the sales that made up the September jump sold for less than $100,000. Another 48 percent came from houses that sold for between $100,000 and $250,000, so that means only 31 percent of September sales were for houses that cost over $250,000.

I hate to be a Gloomy Gus, but this has a coming Cash for Clunkers hangover written all over it.

-- Frank Ahrens
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By Frank Ahrens  |  October 23, 2009; 10:42 AM ET
Categories:  The Ticker  | Tags: existing home sales, home sales  
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I actually hope the $8000 tax credit for buying a home does not get extended. It just propped up the price, especially of the of the cheapest homes, by the same amount. Mostly first-timers who were planning to buy soon anyway bought.

Hopefully, none of them really needed the credit to afford the mortgage - such low standards are what got the mortgage market in trouble in the first place!

Lose the credit. Stop subsidizing the guilty mortgage banking industry. Let the market find the right price. There will be a letdown, but then the true market can emerge.

Posted by: bernadete | October 23, 2009 11:08 AM | Report abuse

Tax payer subsidized housing finally showing some life. Now along with a mortgage interest deduction there is also a tax credit to buy a home. Realtors and Home Builders call this the life blood of their profits and livelihood.

They cannot now imagine life without these new trinkets. What got us into the mess is tax payer subsidized loans from Fannie and Freddie - now new subsidies are coming from the FHA. This hydra just keeps on growing on subsidies....

Posted by: free_np | October 23, 2009 1:09 PM | Report abuse

This is like continuing heroin use after finding out heroin can kill you – continue to subsidize the buying of houses that have been way overpriced by not letting them fall to what they are actually worth.

Why not solve the REAL problem, employment.

The government is subsidizing the buying of houses while it continues to give tax incentives to corporations that move American work out of the country.

Oh sure, new homes mean people will buy all the new stuff for a home. Too bad all the new stuff is not made by American workers.

Posted by: swazendo | October 23, 2009 1:13 PM | Report abuse

Terrifying Prediction: Real Estate Will No Longer Be Fun-Fun-Fun. It's the first thing to go down in bad times and the first to come back up in good times. People aren't exactly giving away real estate. It's an interesting concept though.

Posted by: Dermitt | October 23, 2009 1:31 PM | Report abuse

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