INSTANT VIEW: Existing home sales rebound

NEW YORK (Reuters) - Sales of previously owned U.S. homes surged to their highest level in over two years in September, a survey showed on Friday, providing further evidence the housing market and economy were on the mend.

KEY POINTS: * Sales of previously owned U.S. homes rose more than expected in September, a survey showed on Friday, a positive sign for the prospects of a housing market recovery from a three-year slump. * The National Association of Realtors said sales rose 9.4 percent to an annual rate of 5.57 million units, from 5.09 million units in August. That compared with market expectations for a 5.35 million unit pace.

COMMENTS:

STAN HUMPHRIES, CHIEF ECONOMIST, ZILLOW.COM, SEATTLE, WASHINGTON:

"Existing homes sales showed strong performance in September, after producing some worries for observers following very soft August numbers when home sales declined. Of course, it's very likely that these September numbers represent some shifting of demand forward into this month caused by buyers trying to take advantage of the $8,000 first-time homebuyer tax credit before it expires at the end of November. Another sign of good news is that both total inventory of homes and monthly supply declined from the prior month. In September, we sold 472,000 homes but only added 178,000 homes to the market. "

WARREN SIMPSON, MANAGING DIRECTOR, STEPHENS CAPITAL MANAGEMENT, LITTLE ROCK, ARKANSAS:

"I'm a little bit surprised, better than expected, (The market dip) did surprise me a little bit. But I do think that is good though in the long run. Of course our unemployment numbers seem to have leveled off a little, but I wouldn't call them bullish. But that is a good housing number, that is good news.

"We've had a good run and I think it's a little bit of everything. I think people are just skittish here. You saw the market the other day when it turned on a dime, so I think it's really skittish here. The market is trying to figure out if we really do deserve to be above 10,000 and it's trying to figure out if we can go any higher. And a lot of people are in that camp, so you are going to have a skittish market for a while. But we still have stimulus money and we still have a situation where the market could go up some."

GARY THAYER, MACRO STRATEGIST, WELLS FARGO ADVISORS, ST. LOUIS, MISSOURI:

"It's a good number and consistent with the numbers on pending home sales numbers that we've been seeing that have been up seven months in a row. Those pending sales indications are now showing up in the actual sales numbers. This confirms the improving trend in the housing market."

CRAIG PECKHAM, EQUITY TRADING STRATEGIST, JEFFERIES & CO, NEW YORK:

"It's surprising on its surface but not surprising when you think about the kind of rush consumers have been in to take advantage of the tax credit which is going to be expiring.

"Look for September and October to probably show the same benefit.

"It's a good sign that consumers are scrambling back into the housing market and identifying some perceived values. However, I do think we have to take it with a grain of salt insofar as there's some risk we're borrowing from the future in terms of these home sales levels.

"The bottom line is that the core reason why the capital markets backdrop was so strained in 2008 and into 2009 was really because of the bubble in housing. The recovery in housing sets the base for a firmer tone across the rest of the world."

THOMAS NYHEIM, VICE PRESIDENT, PORTFOLIO MANAGER, CHRISTIANA BANK & TRUST CO, GREENVILLE, DELAWARE:

"It's up 9.4 percent, and that's a little bit of a surprise. However, it shows the trend of there being stabilization in the housing market.

"The reason we sold off is because we're still digesting all the earnings results we've had. There were some good results, but we're not seeing enough top-line growth. That creates the fear that we could see a jobless recovery."

MICHELLE MEYER, ECONOMIST, BARCLAYS CAPITAL, NEW YORK:

"The rapid gain in home sales over the past few months likely owes, in part, to the home buyer tax credit. This was likely a particularly strong force in September as home buyers scurried to complete the sale before the tax credit expires at the end of November. Home sales have effectively been pulled forward and will see a partial reversal in the fourth quarter. That said, the trend in home sales is still higher amid greater affordability and an improving economic outlook."

MICHELLE MEYER, ECONOMIST, BARCLAYS CAPITAL, NEW YORK:

"The rapid gain in home sales over the past few months likely owes, in part, to the home buyer tax credit. This was likely a particularly strong force in September as home buyers scurried to complete the sale before the tax credit expires at the end of November. Home sales have effectively been pulled forward and will see a partial reversal in the fourth quarter. That said, the trend in home sales is still higher amid greater affordability and an improving economic outlook."

JONATHAN BASILE, ECONOMIST, CREDIT SUISSE, NEW YORK"

"We are getting a boost from the first-time home-buyer credit. We have noticed a gap between pending home sales and existing home sales. They are from the same sample. We have been expecting a catch-up gain and we got it. But we may get a pay back from this in the coming back because it's pulling some demand forward. This shows the policy is working.

"It's clear lower mortgage rates and home prices have increased affordability for home buyers. Foreclosures are still an important factor going forward because more of them could put downward pressure on price. We are not out of the woods yet, but the housing market has found its legs."

ROBERT DYE, SENIOR ECONOMIST, PNC FINANCIAL SERVICES GROUP, PITTSBURGH:

"It's certainly a much stronger number than I expected given ongoing weakness in labor markets and recent fluctuations in consumer confidence. But it does show that home buyers have jumped at the opportunity to take advantage of the first-time home buyer's tax credit.

"My concern is that just like cash-for-clunkers, there's a high potential that is forward borrowing from future sales. It raises the concern about what the post tax incentive months will look like if the tax incentive is not extended.

"My concern is that without that support home prices will remain soft and perhaps resume declining going into early 2010."

BOB WALTERS, CHIEF ECONOMIST, QUICKEN LOANS, LIVONIA, MICHIGAN:

"Existing home sales continued their upward trend, recouping from last month's dip. This is a positive sign, validating that the combination of tax credits, favorable home prices and historically low interest rates have combined to help clear housing inventories and strengthen the real estate market. However, the first-time home buyer tax credit will soon expire, and it is looking less likely that the program will be extended. It is yet to be seen how this will impact home sales in early 2010."

WILLIAM LARKIN, PORTFOLIO MANAGER, CABOT MONEY MANAGEMENT, BOSTON:

"The existing home sales data is a good sign for the housing market. I would assume a lot of first time buyers have scrambled to get this $8,000 credit. That will be the part that is hard to define within the numbers."

"It definitely looks like the stimulus that is going into housing is starting to form a bottom."