Home Sales Post 10% Gain in October

Investors got positive housing news Monday morning, as home sales exceeded expectations for the month of October. Given the fragile state of the real estate market and its significance to the economy, the National Association of Realtors’ existing home sales report helped boost the broader market.

The NAR said that home existing-home sales, which include single-family, townhomes, condominiums and co-ops, jumped 10.1% to a seasonally adjusted annual rate of 6.10 million units last month, the highest level since February 2007. That figure is 23.5% above the 4.94 million-unit level in October 2008. Existing home sales are based on transaction closings. The figure jumped more than 9% in September after an unexpected decline in August. The September pop was attributed to a surge of home buyers trying to close before the Nov. 30 deadline to receive first-time home buyer tax credit.

The extension and expansion of the tax credit didn’t occur in time to affect October existing home sales, which were expected to have risen to 5.7 million in October, from 5.57 million in September. That would have represented only a modest increase after the jolt of closings the month prior.

Total housing inventory fell 3.7% to 3.57 million existing home available for sale at the end of October. That represents a 7-month supply at the current sales pace, down from an 8-month supply in September. The decline left total unsold inventory 14.9% below that of the year-ago period.

"The supply of homes on the market is now at the lowest level in over two and a half years -- we're getting closer to a general balance between buyers and sellers," said Lawrence Yun, NAR chief economist.

Although the news helped lift the major averages, home stocks were still mixed. Toll Brothers (TOL) and KB Home (KBH) finished in negative territory, while Pulte Homes (PHM), Lennar (LEN) and D.R. Horton (DHI) posed gains.

This article is an excerpt from our Early Bird markets story, which was originally published the morning of Nov. 23.