The stock market posted a strong surge this morning on the news that resales of U.S. homes increased 10.1 percent in October to a seasonally adjusted annual rate of 6.10 million, according to the National Association of Realtors (NAR_.
Lawrence Yun, NAR chief economist, was surprised at the size of the October gain.
"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. "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."
Now that the tax credit has been extended and expanded, potential buyers have until April 30 to have a contract in place.
"There is still a large pent-up demand that can be tapped before the tax credit expires. Our recent consumer survey further shows that 13 percent of successful first-time buyers had a previous contract that was cancelled or fell through – there likely are many more buyers who were attempting to purchase but simply ran out of time," Yun said.
Historically low interest rates also are boosting the market.
"Mortgage interest rates last month were the third-lowest on record dating back to 1971," Yun said. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.95 percent in October from 5.06 percent in September; the rate was 6.20 percent in October 2008. Last week, Freddie Mac reporter the 30-year rate dropped to 4.83 percent.
The Dow Jones Industrial Average soared this morning by more than 150 points.
Local stocks in the BizTimes Stock Index shared in the market's broad exuberance. The largest local gainers this morning were Bucyrus International Inc. (up $1.50 to $53.55), Manpower Inc. (up $1.26 to $50.92) and Badger Meter Inc. (up $1.04 to $37.72).
Stock market soars with strong housing sales report
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