By Claudia Hirsch

NEW YORK, Sept 21 (MNI) - U.S. existing home sales bustled in August and September, as attractive prices, a federal tax incentive and low interest rates buoyed activity in all but the highest price ranges, according to real estate executives.

Real estate sales agents said the $8,000 tax credit for first-time home buyers has spurred business since its April 8 inception -- and has inspired a rush to closing ahead of its Dec. 1 expiration. Foreclosure-pressured prices have also pushed sales throughout the year, beginning in the low end of the market and radiating outward. The combination of the two forces, as well as historically low borrowing rates, has accelerated this rebound throughout the summer.

At Houlihan Lawrence, a constellation of 25 real estate offices in New York's Westchester, Putnam and Dutchess counties, outside New York City, 2009 has brought month-to-month increases in sales and consistently slowing year-over-year decreases in prices and units sold.

"There's a healthy level of activity going on," said Chris Meyers, Houlihan's chief operating officer. "We seem to have stabilized at levels that are quite sustainable. There's a sense that the worst of the adjustment is behind us."

Houlihan's third-quarter-to-date closings are down 18% vs. 2008, compared to a first-quarter drop of 35%. Homes of $1 million or more are off by 31% so far in the third quarter. Though September may show a seasonal dent in business vs. August, Meyers expects the fourth quarter to bring easier year-on-year comparisons.

Meyers said August sales in Dutchess Co., the company's northernmost territory, actually rose 15% vs. a year ago, marking the first increase in more than three years in a region that absorbed plenty of subprime mortgage pain.

"The areas where prices have corrected the most are areas where transactions are rebounding the most," he said. Meyers expects home values to remain under pressure into 2010, as pending home closings provide more comparisons that justify low prices.

Inventory is flat-to-lower across his markets. High-end homes in Westchester Co., the area most closely tied to New York City's and Wall Street's fortunes, are seeing the greatest imbalance between supply and demand. Westchester prices dropped 12% in August vs. a year ago.

"At the extreme, homes of $5 million or more have about a five-year supply at the moment," Meyers said, but added that activity in that arena has actually improved from non-functioning levels earlier this year.

Out West, a real estate agent in Northern California said bargain hunting and the first-time buyer credit combined to spark activity beginning in May.

"If you didn't have this tax incentive we'd still be in a spiral down," said Ben Coleman, owner of Century 21 Hartford Properties, in San Francisco.

"This is a false bottom," he said, and noted that job and home losses continue. Coleman said that banks appear to be consciously easing up on foreclosures to prevent further dramatic erosion in prices, but he warned that that only leaves this "toxic stuff" bottled up.

"You take all that into consideration and you end up with a problem that's going to come back to bite us in the butt," he said. "You're also still going to have pressure on prices."

Coleman said his closings and revenues have declined about 10% year-to-date vs. 2008, but he expects the push that began in May to continue through November alongside the tax credit. Attractive interest rates and prices are also driving the market, and inventory and time on the market are both decreasing, he said.

Homes under $700,000 are moving fastest, he said, and some are generating as many as 20 offers and much-higher-than-asking contract prices if sellers set their listing prices low enough. Among homes under $500,000, San Francisco's median price is about 14% softer than in 2009, but Coleman said prices have been bouncing around in a range throughout the year and should continue to do so for several years.

In Las Vegas, possibly the nation's capitol of distressed sales, business is booming, according to Stacey Vitto, a sales agent at Realty One Group.

"I have tons of business now, but I make less than half from them than I used to," she said. About 70% of her sales are to investors, many of whom pay all cash for condominiums and townhouses under $100,000. Much of the rest are first-time home buyers taking advantage of the current tax incentive and low financing rates.

Vitto said prices are still slipping some, but stability is emerging along with more motivated buyers. Time on the market has contracted in the last couple of months. Inventory is lighter, but she said that may be due to banks' withholding defaulted properties from the foreclosure process.

She said banks are probably negotiating terms with some existing owners to keep them in their homes and encouraging short sales of certain properties rather than costlier and lengthier foreclosures. But there's also talk, she said, of banks renting out vacant homes till the foreclosure glut turns around.

"We have 8,700 properties available in Las Vegas of an estimated 21,000," Vitto said. She expects a new wave of defaults ahead as rates reset on non-subprime mortgages and, possibly, another flood of inventory as a result.

All of Vitto's business is with houses priced at or below $200,000. About 95% of her 21 said higher each month this year. She said she'll probably double her closing volume this year over last, but her income may only rise by $20,000.

An Arizona franchisee of Parsippany, NJ-based Century said he's added sales staff to accommodate rising demand.

"September is on track to be about 20% over last year's business," said Floyd Scott, owner of Century 21 Arizona Foothills, with eight Phoenix-area locations. "What's driving it is very simple -- low prices."

Inventory of homes priced at or below $300,000 is "essentially cleaned out," standing at a two-months' supply, he said. Total single-family inventory in the area has tumbled more than 40% since February, he added.

"Lack of inventory could hurt our fall sales."

Scott said any bank-owned or short-sale properties are juggling multiple bids. He too noted fewer properties coming from banks, but he's not convinced that's because the lenders are artificially limiting foreclosures. Scott cited an area unemployment rate well below the national average, a growing population and still-active infrastructure projects as possible evidence that the foreclosure rate may be organically slowing. He's also spotted a recent increase in local leisure activities and dining out.

Prices at the lower end have actually firmed by about 4% or 5% vs. earlier this year but are off by chunky double-digit percentages vs. a year ago, he said. Meanwhile, prices are still falling and inventory is still rising for homes above $500,000, the level at which potential buyers are more likely to run into financing problems.

Scott's closings year-to-date have shot up 19% vs. 2008, but his revenues are nonetheless 15% softer. He said his impressive volume would be higher but for appraisal issues that foil some deals at the very end of the process.

A real estate agent in Washington, DC said her company's July and August commerce topped year-ago figures, and inventory has thinned.

"Right now there's a scramble, especially in the city, for one-bedrooms," said Bonnie Roberts-Burke, a sales agent with Evers &Co. whose properties center around Northwest DC and close-in Maryland and Virginia suburbs. The expiring tax credit and a sense that interest rates can only go higher from here has the condo market jumping, she said.

Indeed, some behaviors dating from the height of the housing froth may be returning. In one multiple-offer case, she said, the seller accepted a lower bid that had fewer contingencies like inspection and appraisal. But unlike the boom years, tales now abound of lenders abandoning buyers at the settlement table because of banks' vastly heightened internal scrutiny, she said. Evers & Co. works with a variety of alternative, smaller lenders, Roberts-Burke said.

If priced right, most properties in the $300,000 to $800,000 range are selling quickly, she said. While prices have fallen throughout the year, Roberts-Burke said they've probably begun to steady.

A sales agent in outside St. Louis reported better business beginning in May, spurred by prices, the tax credit and, for re-emerging investors, the stock market's uptrend.

"People were waiting for the bottom of the market," said Chris Lorenz, of Keller Williams Sunset Hills Realty, in the city's southwestern suburbs. His August and September sales grew over those of 2008, and he expects to end 2009 with a 20% gain.

"I think the worst of this is definitely past us."

He said listing prices are roughly 10% below year-ago levels, but the softening has recently slowed. In the $225,000 to $400,000 range, most prices are negotiated about 3% or 4% below asking, as in a normal market. Prices for higher-end homes are off by about 15%, Lorenz said.

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