Existing Home Sales Rise 10.1 Percent

(MoneyWatch)  The national Association of Realtors reports that existing home sales rose 10.1 percent in October:

Driven by the first-time buyer tax credit, existing-home sales showed another big gain in October with a strong uptrend established over the past seven months, while inventories continue to decline, according to the National Association of Realtors®.

Existing-home sales ?€" including single-family, townhomes, condominiums and co-ops ?€" surged 10.1 percent to a seasonally adjusted annual rate¹ of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.

Lawrence Yun, NAR chief economist, was surprised at the size of the gain. "Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November," he said. "With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer." ...

This is, of course, good news, but the question is how much of the increase is being driven by the government's tax credit program to help first-time homebuyers, and how much of it would have occurred even without the tax credit (the program has been extended through April, but that wasn't known for much of the month so some of these sales represent a rush to beat the deadline).

Via Calculated Risk - Click on graph for larger image.

That's not a question we can answer with precision at this point - the data that are needed are not yet available - but the increase did surpass expectations leading to some confidence (and a market rally) that there was more to the increases than just the government program. I am hopeful, the numbers are encouraging, and the inventory decline is good news in any case, but I'll withhold jubilance over these numbers until it becomes clear the recovery can sustain itself without the government's help.

[More from Calculated Risk I, Calculated Risk II, The Big Picture (Barry Ritholtz throws cold water on the numbers), and Free Exchange. Update: One more from Calculated Risk.]