Sales of single-family existing homes jumped 9.7% in October following an 8.7% jump in September, as first-time buyers rushed to take advantage of the $8,000 tax credit, according to the National Association of Realtors (NAR).

NAR economist Lawrence Yun expects robust sales in November and a drop off in December.

"With such a sales spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer," he said.

The NAR reported that sales of previously owned single-family homes jumped to a seasonally adjusted annual rate of 5.33 million in October from 4.86 million in September.

The first-time buyer tax credit was due to expire at the end of November, but Congress extended it and created a new $6,500 tax credit for repeat and move-up buyers.

The extension runs from Dec. 1 through April 30 and it gives buyers with a binding sales contract an extra 60 days to close. The median sales price of a single-family home in October was $173,100 in October, down 6.8% from a year ago. The NAR noted that 30% of sales involved short sales and foreclosed properties.

Meanwhile, inventories of unsold homes, including condominiums and coops, fell to a seven-month supply at the current sales pace.

The supply of homes on the market is now at the lowest level in two and a half years, the NAR chief economist said.

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