(Updated with additional data and commentary.)
NEW YORK (
) -- Existing-home sales rebounded 10% in September to a better-than-expected seasonally adjusted annual rate of 4.53 million units, the National Association of Realtors said Monday morning.
Economists had expected the figure to come in at 4.25 million units,
. July's rate of 3.84 million homes sold was a
John Canally, economist for LPL Financial, expected "some kind of pop" in existing-home sales data for September, and pointed out that we are now finally past the bursting of the
first-time homebuyers tax credit bubble. "The data now stands on its own, which is good," he said. "There had been a lot of distortion."
Despite the better-than-expected rebound, September's existing-home sales data remains 19.1% below year-earlier levels when first-time homebuyers were rushing to take advantage of those federal tax credits.
The national median existing-home price for all housing types was $171,700 in September, 2.4% below year-earlier prices and lower than $178,600 in August. Distressed homes accounted for 35% of sales in September, compared with 34% in August and 29% in September of last year.
NAR chief economist Lawrence Yun said the housing market is in the early stages of recovery. "A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions," he said.
Ahead of the report Canally told
a small increase in existing-home sales would be welcome news but that a sustainable rebound is still a long way away. He said market watchers should pay close attention to home inventories, as well as sales and prices. Existing-home inventories are well off their highs but still very high by historical standards, Canally explained.
Total housing inventories at the end of September fell 1.9% to 4.04 million existing-homes available for sale, a 10.7% supply at the current sales pace, down from a 12-month supply in August.
Yun said "vacant homes and homes where mortgages have not been paid for an extended number of months need to be cleared from the market as quickly as possible, with a new set of buyers helping the recovery along a healthy path," Adding that "inventory remains elevated and continues to favor buyers over sellers. A normal seasonal decline in inventory is expected through the upcoming months."
The U.S. housing market has been "bouncing along the bottom on home sales since early 2009," Canally added, and while conditions have improved since then the market remains "kind of directionless."
"We need to see good, positive non-government-sponsored momentum in the housing market," he said.
The wild card in the housing market has become the unraveling foreclosure mess, the economist said, and how it will impact the housing market.
"Will banks take their eyes off the ball in terms of lending to focus on redocumenting already-foreclosed upon loans?" he asked. "I'd like to think rates are going to be low with quantitative easing, but worries about crossing Ts and dotting Is would slow the healing process down."
Just as the subprime mortgage troubles expanded into a total housing market downfall, the latest scandal in the home loan industry has expanded into a nationwide political firing line aimed -- once again -- toward the banks due to
, dubbed "robo-signing."
The housing market has been under tremendous pressure for some time, and demand fell further after the
Record-low and near-record-low mortgage rates failed to spark robust demand for housing in recent months, prompting many homeowners to refinance their existing mortgages rather than purchase new or previously owned homes.
Stocks in the homebuilder sector were mostly higher. The
SPDR S&P Homebuilders
, an exchange-traded fund that tracks the homebuilder sector, rose 1.5% while the
iShares Dow Jones US Home Construction
pushed up 2.2%.
, which beat top- and bottom-line quarterly expectations last week even as earnings fall nearly 40%, rose 2% Monday morning.
, which said last month it returned to year-over-year profitability in its recent quarter, gained 1.6%.
A report on new-home sales in July is due to be released on Friday. The consensus call is for sales of newly-built homes to have risen to a seasonally adjusted annual rate of 291,000 in August according to estimates from
-- Written by Miriam Marcus Reimer in New York.
>To contact the writer of this article, click here:
>To follow the writer on Twitter, go to
>To submit a news tip, send an email to:
READERS ALSO LIKE:
Get more stock ideas and investing advice on our sister site,
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.