Figures from the National Association of Realtors show that the number of contracts to buy rose 3.7% from September to October, the ninth straight month in a row that it has recorded an increase.
The group's index is now up 31.8% from last October, the biggest annual gain since it was created in 2001.
The NAR attributed the rise to the $8,000 tax credit for first-time buyers which has due to end in November but was recently extended to April 30 next year and expanded to include people who now own homes.
Analysts view the data as a leading indicator of future sales because it charts contracts, not actual completed transactions.
But serious doubts linger about whether these kinds of gains can be maintained, especially if unemployment keeps rising and government intervention in the housing market is curtailed.
NAR chief economist Lawrence Yun said home sales underperformed during the past year and are now on the opposite end of a pendulum swing, but cautioned that home sales could dip in the months ahead because of the lag time between buyers initiating the process of buying a home to take advantage of the extended first time homebuyer tax credit and deals closing.
‘We could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process,’ Yun said.
Meanwhile, sales of new, single family homes increased 6.2% in October, according to figures from the Census Bureau and the Department of Housing and Urban Development.
The rate of sales has increased 30.7% since its January low this year and the supply of unsold homes relative to sales has decreased 46% since January.
‘The rise in new home sales is encouraging.
Sales have risen substantially above their low in January, and the inventory of unsold homes has fallen sharply.
Low mortgage rates and the extension and expansion of the tax incentive should support continuing sales growth in the coming months,’ said Commerce under secretary Rebecca Blank.
The median sales price of new homes sold in October was $212,200 and the average was $261,100.
The seasonally adjusted estimate of new houses for sale was 239,000 at the end of October, representing a 6.7 month supply at the current sales rate.
