WASHINGTON — Racing to complete their purchases before a tax credit for first-time owners expires, homebuyers pushed sales up last month by the largest amount in more than 26 years.
After jumping 9.4 percent in September, home resales are up nearly 24 percent from the bottom in January, the National Association of Realtors said Friday. But the housing market's momentum could easily peter out if Congress doesn't extend the credit of up to $8,000 for first-time buyers beyond its current Nov. 30 deadline.
Nationwide sales rose to a seasonally adjusted annual rate of 5.57 million last month, from a downwardly revised pace of 5.1 million in August. It was the strongest month in two years and beat economists' forecast of 5.35 million, according to Thomson Reuters. Sales, however, are still down 23 percent from their peak four years ago.
Home sales in the Wichita area were down 6.4 percent in September compared with the same month in 2008, but the decline was less than in earlier months, according to the Wichita Area Association of Realtors.
So far in 2009, home sales in the Wichita area are down 20.2 percent from the same nine months of last year.
But the worst drops were in the first five months of the year, when sales were down 25 to 30 percent from the previous year.
In another positive sign nationally, the inventory of unsold homes on the market fell almost 8 percent to 3.6 million. That's less than an eight-month supply at the current sales pace, and the lowest level since March 2007.
The competition for low-priced foreclosures has become fierce in places like Las Vegas and Southern California.
Still, economists caution that the pain from the worst housing bust since the Great Depression probably isn't over yet.
While home sales and housing construction have risen steadily after hitting bottom earlier this year, most economists think that prices, which recently stabilized, will resume their descent. The median sales price last month was $174,900, down almost 9 percent from $191,200 a year earlier, and slightly lower than August's median of $177,300.
Nationwide, more than 3 million households are either three months behind on their payments or in foreclosure, according to First American CoreLogic, a research firm.
Fears about job losses are stifling some sales, said David Hudson, an agent with Exit Realty Platinum outside Atlanta.
"Buyers are still nervous," he said. "They're worried about buying a house, and then all of a sudden, I might not have a job."
To entice more buyers, Sens. Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., want to extend the tax credit through June 30, and expand it to include all homebuyers, at an estimated cost of $16.7 billion.
Realtors and homebuilders are loudly in favor, arguing that the tax credit is crucial to get the housing market back on its feet.
"We are not there in terms of removing the consumer fear factor," said Lawrence Yun, the Realtors' chief economist.
However, some analysts say the tax credit may not be as critical to the housing market as real estate agents suggest. The Realtors association has "an incentive to talk up the effects of the credit as it is urging Congress to extend it, and it therefore may be exaggerating the credit's effects," wrote Nomura Securities economist Zach Pandl.