WASHINGTON, Oct 24: US existing home sales rose by an unexpected 5.5 per cent in September as buyers were attracted by falling prices, an industry survey showed on Friday.

The National Association of Realtors (NAR) said sales of existing homes and apartments were up 1.4 per cent from a year ago, the first annual increase in three years. Sales rose to an annualised rate of 5.18 million units in August, beating analysts’ consensus forecast of 4.91 units.

The market rebounded from a decline in sales in August as buyers were drawn by falling home prices, NAR said.

The median price of existing homes fell again, dropping 9.0 per cent in September from a year ago, to 191,600 dollars.

“Most, if not all, the rise in sales is due to vulture investors buying cheap foreclosed homes, but all sales reduce inventory,” said Ian Shepherdson, chief US economist at High Frequency Economics.

“If this continues people will stop expecting further price falls and activity will start to recover. October and November could be rough, though.” Gary Bigg at Bank of America was more cautious about a recovery in housing, where the bursting of a huge bubble two years ago has roiled the US and global economies.“While these results suggest improving demand, the headwinds of falling household wealth, tight lending standards and rising unemployment indicate that a substantial recovery in home sales is quite unlikely until mid-2009,” Bigg said.

The inventory of unsold homes on the market slipped 1.6 per cent to 4.27 million units in September, a 9.9-month backlog at the current sales pace, compared with a 10.6-month inventory in August.

The NAR said sales increased last month “as buyers responded to improved housing affordability conditions.” ”This is the first time since November 2005 that home sales have been above year-ago levels,” NAR president Richard Gaylord said.

“Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future,” the California real estate broker said.—AFP