Sales of previously owned homes in the United States likely rebounded in September after a surprise fall in August, boosted by a government incentive for first-time buyers, low prices and mortgage rates, according to a Reuters poll. The survey of 65 economists on average forecast existing home sales rose to a seasonally adjusted annual rate of 5.35 million units in September from 5.10 million units in August. The National Association of Realtors (NAR) will release its existing home sales report on Friday. In an indication that existing home sales probably rose last month, the real estate trade group's pending home sales index in August rose to its highest level since March 2007. The pending home sales index, which leads existing home sales by a month or two, is based on contracts signed during a particular month. It also rose in July. "Economic conditions are slowly improving, price declines and low mortgage rates are keeping affordability high, and there are many distressed sales. The $8,000 homebuyer tax credit is probably helping sales," wrote economists at JPMorgan. The housing market, whose collapse is behind the worst U.S. economic recession in 70 years, is emerging from a slump that started in 2006. There are concerns, however, that the recovery could fizzle out when the popular government tax credit for first-time home buyers ends next month. "The biggest test for home sales, however, will be in December when the first-time home buyer credit ends and in the first quarter, when Fed (Federal Reserve) mortgage purchases end," said Chris Low, chief economist at FTN Financial in New York. "Only then will we know if the rebound in sales is fundamental or the product of stimulus alone." Analysts also expect the existing home sales report to show a decline in the supply of houses on the market, a critical component for a healthy recovery of the sector.

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