The National Association of REALTORS (NAR) reported in October that existing home sales increased over 5 and a half percent -- a sign of improved housing affordability. The estimated annual volume has been revised upwards from of 4.91 million to 5.18 million units for 2008, representing a 1.4 percent increase over the previous year. The combination of lower prices, higher inventory and low mortgage rates have all contributed to the increase in sales.

"This is the first time since November 2005 that home sales have been above year-ago levels," said NAR president, Richard Gaylord. "Credit tightened at the end of September, but the improvement demonstrates that buyers who have been on the sidelines want to get into the market to make a long-term investment in their future."

Freddie Mac is reporting a recent drop in interest rates for the 30-year, conventional, fixed rate mortgage, averaging 6.04 percent in September, down from 6.48 percent in August. Despite the lower rates, speculative investors have not yet returned to the market, according to Lawrence Yun, NAR chief economist. Yun reports, "80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms."

Total housing inventories were down 1.6 percent for the month of September, marking two consecutive monthly declines since inventory levels peaked in July.

First-time buyers and bargain hunters everywhere are looking for ways to stretch their dollar. Here are three helpful tips for maximizing your purchasing power:

1. Save money with a fixer-upper! Although these homes take a little elbow grease, the money you save can be significant. Put that extra money in your savings account, re-invest it in your home, or upgrade your location!
2. Higher fuel costs have made remote properties less attractive for certain buyers. Don't be afraid to search a little farther out from your work if good public transportation is available.
3. Size matters. Bigger homes are typically more expensive, so why not buck the trend and look for something a little smaller? There is generally less demand for smaller homes, and you can spot some great deals if you are willing to act fast!