Did anybody expect this ?

The National Association of Realtors yesterday released statistics for sales of existing homes in October, and, holy cow, the numbers are incredible.

Sales spiked more than 10 percent from September and more than 23 percent from October of last year. With 6.1 million units sold, October was the highest month for sales since February of 2007, nearly three years ago.

According to Thompson Reuters, ecomists expected only 5.65 million units to sell. So sales beat the forecast by nearly a half-a-million homes.

The obvious factor in the big jump is the federal government's first-time home buyer tax credit, which was orginally set to expire at the end of November. In October, nobody really knew if it was going to be extended (it eventually was, to June of next year).

NAR Chief Economist Lawrence Yun, no stranger to optimism when it comes to the housing market, was surprised at October's numbers.

“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 in a statement released by the NAR. “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.”

But you have to think that the tax credit isn't the only reason houses are selling again. Interest rates are really, really low, and home prices in many areas continue to fall. So home ownership is more affordable, whether you get the government's tax credit or not.

So while Yun's suggestion that there will be a kind of "winter break" in home sales is probably correct, it might not be a great idea to hibernate all winter. The government will eventually stop propping up the housing market, which will not only mean the end of the tax credits but also the downward pressure on interest rates for home loans. Some experts predict this could occur as early as next spring.

Also keep prices in mind if you're considering a home purchase, either as your primary residence or as an investment. October's big month pushed the national inventory of homes on the market down to seven months' worth -- not nearly as big a stock of homes as were on the market just six months earlier.

And though the national median price dropped again in October -- to $173,100 -- the rate at which prices is falling continues to decline. With a shrinking inventory and theoretically more buyers in the market come next spring, prices could start to rise.

“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 in the NAR release. “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.”

In other words, it won't pay to wait. 

-Rob Minton

Founder, Income for Life

The National Association of Realtors yesterday released statistics for sales of existing homes in October, and, holy cow, the numbers are incredible.

Sales spiked more than 10 percent from September and more than 23 percent from October of last year. With 6.1 million units sold, October was the highest month for sales since February of 2007, nearly three years ago.

According to Thompson Reuters, ecomists expected only 5.65 million units to sell. So sales beat the forecast by nearly a half-a-million homes.

The obvious factor in the big jump is the federal government's first-time home buyer tax credit, which was orginally set to expire at the end of November. In October, nobody really knew if it was going to be extended (it eventually was, to June of next year).

NAR Chief Economist Lawrence Yun, no stranger to optimism when it comes to the housing market, was surprised at October's numbers.

“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 in a statement released by the NAR. “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.”

But you have to think that the tax credit isn't the only reason houses are selling again. Interest rates are really, really low, and home prices in many areas continue to fall. So home ownership is more affordable, whether you get the government's tax credit or not.

So while Yun's suggestion that there will be a kind of "winter break" in home sales is probably correct, it might not be a great idea to hibernate all winter. The government will eventually stop propping up the housing market, which will not only mean the end of the tax credits but also the downward pressure on interest rates for home loans. Some experts predict this could occur as early as next spring.

Also keep prices in mind if you're considering a home purchase, either as your primary residence or as an investment. October's big month pushed the national inventory of homes on the market down to seven months' worth -- not nearly as big a stock of homes as were on the market just six months earlier.

And though the national median price dropped again in October -- to $173,100 -- the rate at which prices is falling continues to decline. With a shrinking inventory and theoretically more buyers in the market come next spring, prices could start to rise.

“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 in the NAR release. “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.”

In other words, it won't pay to wait.