Supply of homes slips to 10.7 months
* Median home price falls 2.4 percent from year-ago (Recasts with details, byline, updates markets)
By Lucia Mutikani
WASHINGTON, Oct 25 (Reuters) - Sales of previously owned U.S. homes rose a greater-than-expected 10 percent in September, but remained at depressed levels that point to a painful and protracted recovery for the housing market.
The rise took sales to an annual rate of 4.53 million units, the National Association of Realtors said on Monday. It was the second monthly gain and it far outstripped economists' expectations for an increase to a 4.30 million-unit pace.
Still, the data did little to weaken the case for further monetary easing from the Federal Reserve, with sales far below the 5 million-unit pace usually associated with a healthy market.
"This is relatively goods news but the housing market situation has a long way to go before it fully recovers," said Chris Christopher, a senior economist at IHS Global Insight in Lexington, Massachusetts.
U.S. existing home sales graphic: r.reuters.com/nux99p
The report had little impact on U.S. financial markets as investors continued to look ahead to the Nov. 2-3 Fed meeting at which officials are expected to decide to inject more money into the economy through bond purchases to drive borrowing costs lower and stimulate demand.
Expectations of further Fed easing pushed the U.S. dollar down to a fresh 15-year low against the yen and lifted prices for U.S. government debt, pushing yields lower.
Stocks on Wall Street rose as traders anticipated a looser monetary policy and piled into riskier assets.
STABILITY AT LOW LEVELS
The Fed cut overnight interest rates to near zero in December 2008 and has already bought about $1.7 trillion worth of Treasury and mortgage-related debt. That helped push mortgage rates to historic low levels.
The housing market is showing signs of having bottomed after hefty declines in the aftermath of the end of a popular tax credit for home buyers earlier this year.
Activity, however, remains very subdued and the recovery is expected to be very slow given the 9.6 percent U.S. unemployment rate. A cloud of uncertainty from investigations into the processing of foreclosures by some banks looms over the sector, which was at the heart of the 2007-2009 recession.
Last month, foreclosed properties accounted for 23 percent of sales while short sales made up 12 percent. The combined percentage was up slightly from August. First-time buyers accounted for 32 percent of transactions in September.
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