U.S. home sales jump

Sales of existing U.S. homes rose 9.4 per cent in September as Americans rushed to take advantage of a soon-to-expire tax credit for first-time buyers.

The National Association of Realtors said sales last month rose to a seasonally adjusted annual rate of 5.57 million — the highest number in more than two years.

That beat the consensus forecast of 5.35 million, according to estimates compiled by Thomson Reuters.

An $8,000 US tax credit for first-time buyers is due to expire at the end of November. Congress is considering an extension, but a decision has not been made.

Despite the rosy-looking numbers, analysts say the U.S. housing market still faces formidable hurdles.

"Even if the first-time homebuyer tax credit deadline is extended … the market faces numerous headwinds, including a likely continued increase in foreclosures, that will limit the recovery well into next year," said BMO NesbitBurns economist Sal Guatieri.

The median price of a U.S. resale in September fell to $174,900 US. That's down 8.5 per cent from a year ago, the smallest year-over-year drop in 13 months.

About 3.63 million homes were available for sale at the end of September — the lowest number in 2½ years. That's a little less than an eight-month supply at the current sales pace. 

First-time buyers accounted for about 45 per cent of home sales in the past year, the National Association of Realtors said.

Almost three in 10 homes sold last month — 29 per cent — were classified as distressed properties, meaning the previous owners had failed to meet mortgage commitments or were selling under financial pressure.