As reported today by the National Association of Realtors, sales of existing homes jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.09 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in over two years, since it hit 5.73 million in July 2007.  Median prices were down 12% from last year.

The Northeast saw sales rise 4.4% year over year, with the median price down 7% from last year.

The rise in sales is generally attributed to several factors, namely the first time buyer’s tax credit, rock bottom prices driven by foreclosure sales, and continued record low interest rates.  Combined, these factors have driven the percentage of first time buyers to an all time high.

I’m working on my Q3 Boston Market Update and will have detailed local numbers shortly.  But I think the reasons we see less of a sales rise in the Northeast in general are exactly the same one causing sales to rise more in other areas.  Let me explain.

The first time buyer tax credit has been a huge driver in many parts of the country.  However, in the Back Bay and South End for example, where one bedroom “starter” condos easily cost $400,000 and up, the annual income needed to purchase a “first time buyer” home exceeds the income cap on the first time buyer credit. So we see less of an impact from that program in our most expensive neighborhoods because most buyers make too much money to qualify for it.

In many markets, foreclosures and short sales make up a huge percentage of homes for sale, driving up inventory and driving down prices all around.  As prices plunged, buyers finally have started moving back into the market to take advantage of some huge bargains and inventory is starting to come back down in many area.  In the downtown Boston neighborhoods however, we have been mostly spared this cycle.  Foreclosures and short sales remain rare. Our prices have remained relatively stable for the most part, and inventory never ballooned (in fact it’s been down).  This has been helpful to sellers on the pricing front, but has kept many bargain hunting buyers on the sidelines.

Boston always has people looking to buy and sell, and rock bottom rates have certainly helped.  Properties do sell and we continue to be very fortunate relative to many other areas.  So it’s natural that our market, which has gone down a lot less than others, will go up less quickly as well.

Look for more detailed local statistics an analysis here in the coming weeks.  In the meantime, please feel free to contact me with any questions you may have.  I’m here to help!