The ten percent jump in existing home sales is the biggest monthly gain in 28 years. But the numbers still stink.
In fact, September was the third worst month on record. What happened was that the slump in sales this summer created a lot of room for month-over-month improvement, even though overall sales levels remained at record lows.
September's data still has government stimulus in it, as it's showing the final closings from the tax credit. Thirty-two percent of home buyers in September were first timers and a whopping 29% paid in cash, which really gives you an idea of where the mortgage market is today. Sales were still 19 percent below September of 2009, so that tempers the big gain as well. The median sales price also fell 2.2 percent year over year and is the lowest reading since March.
Olick goes on to warn that we're likely to see a major slump in existing home sales later this year, although perhaps not in the monthly numbers for October. Why? Because more than a third of the September sales were "distressed"—that is, houses in foreclosure or short-sales.
Those sales are going to go away at some point, thanks to the foreclosure freezes we saw earlier this month. But since the sales numbers count closings, it will take a bit of time for them to hit the tape.