The rate of existing home sales increased 10.1% in October, the National Association of Realtors (NAR) said. The seasonally adjusted annual sales rate of existing homes — including single-family, town home, condominium and co-op dwellings — was 6.1m in October, up from a rate of 5.54m existing home sales in September. October’s rate is 23.5% above the rate of 4.94m in October 2008 and is at its highest rate since February 2007, when the rate was 6.55m. NAR chief economist Lawrence Yun credited the increase to a last-minute push of first-time homebuyers trying to close a deal on a home before the credit was set to expire prior to an extension passed in November. “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.” The nation’s inventory of existing homes decreased 3.7% to 3.57m, representing a seven-month supply of homes at the current pace. That’s a decline from an eight-month supply in September. Unsold inventory is down 14.9% from one year ago. The months supply of homes hasn’t been this low since February 2007, when it was at a seven-month supply. Distressed properties accounted for 30% of sales in October. “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,” Yun said.

The national median existing-home price for all housing types was $173,100 in October, down 7.1% from October 2008. Low prices, along with historically low mortgage interest rates are fueling the increase in sales, Yun added, but he warned prices could increase in 2010. “With the abnormal drop in home prices over the past few years, the price-to-income ratio has fallen below the historic trend line,” Yun said. “This is adding to the buying power of the typical family, with affordability conditions this year at the highest on record dating back to 1970, but prices are beginning to flatten and are poised to rise next year.” The single-family segment of home sales increased 9.7%, while the condo and co-op segment was up 13.2%. Existing sales in the Midwest increased 14.4%, leading all regions of the country in October, followed by increases in the South (12.7%), Northeast (11.6%) and the West (1.6%).