October 28th, 2010 7:52 PM by Lehel S.
NEW YORK (CNNMoney.com) -- Existing home sales climbed for the second month in a row in September, fueling some hope that a housing recovery is underway.
Sales of previously owned homes rose 10% to a seasonally adjusted annual rate of 4.53 million units last month, the National Association of Realtors reported Monday. That was up from a 4.12 million rate in August.
The report came in much stronger than expectations. Economists had forecast sales to edge up to an annual rate of 4.25 million units, according to consensus estimates from Briefing. com.
The gains of the past two months were welcome news, after home sales sank 27% to their lowest level in 15 years in July. While some economists say a housing recovery is underway, a foreclosure moratorium in October may have a negative impact on next month's report.
"A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium," Lawrence Yun, NAR chief economist, said in a release. "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."
While Tuesday's report offered a glimmer of hope for housing, home sales remained 22% below this year's peak in April, and 19% from a year earlier. The housing market peaked thanks to an $8,000 tax credit for first-time buyers, which has since expired.
But now, amid high unemployment and uncertainty about the economy, consumers just aren't ready to take the plunge into home ownership, like they were a year ago, said Leif Thomson, chief executive of Mortgage Master Inc., a privately owned lending firm.
Despite having unbelievably great interest rates and low housing prices, the housing market is stuck in the mud right now," he said.
The inventory of homes on the market edged down 1.9% in September to 4.04 million units, but that number is still "unbelievably high," Thomson said.
About 35% of homes sold during the month were in foreclosure, the Realtors said.
The median price of homes sold in September was $171,700, down 2.4% from a year earlier, the report showed.