A surge in existing-home sales boosted spirits on Wall Street yesterday, but left wealth managers less impressed.

Thanks to the first-time buyer tax credit, existing-home sales jumped 10 per cent in October, generating the most sales activity since February 2007, according to The National Association of Realtors.

The stock market responded positively, led by the Dow Jones Industrial Average, which jumped 132.79 points to 10,450.

But wealth managers, including Boris Blum, president and chief executive of Wealth Planning and Management of Woodland Hills, Calif., were not as quick to rally.

“It’s a green shoot that sounds promising,” Mr Blum said, “but we still have a lot of headwinds ahead of us.”

“For example, defaults on existing mortgages have hit record highs and are still increasing,” he said. “I don’t think a one month up tick represents a fundamental reason for higher stock prices.”

But Dean Maki, chief US economist at Barclays Capital in New York, in an interview with Bloomberg yesterday, called the October housing numbers “an impressive increase.”

The October sales surge, demonstrated “a lot of pent-up demand for housing,” Mr Maki said. “Buyers have enough confidence to take the plunge. The housing market recovery will be a durable one.”

The NAR’s chief economist, Lawrence Yun, predicted more strong sales for November.

“Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,”  Mr Yun, said.

But he also cautioned that the sales spikes in October and November could mean “a measurable decline” in December and early next year “before another surge in spring and early summer.”

Potential home buyers now have until April 30 to have a contract in place under the extended and expanded tax credit. “There is still a large pent-up demand that can be tapped before the tax credit expires,” Mr Yun said.

Historically low interest rates also are boosting the market. “Mortgage interest rates last month were the third lowest on record dating back to 1971,” Mr Yun noted.

In addition, unsold inventory of single-family houses, town homes, condominiums and co-ops are 14.9 percent below a year ago the NAR reported.

The national median existing-home price for all housing types was $173,100 in October, down 7.1 percent from October 2008. Distressed properties, which accounted for 30 percent of sales in October, continue to downwardly distort the median price because they usually sell at a discount relative to traditional homes in the same area.

“In the second half of 2010, if home values show consistent stabilization or even a modest increase, then home sales could remain at normal healthy levels because consumers would no longer be worried about a price overcorrection,” Mr Yun added.