In April, Existing home sales and prices rose. The home sales report that was issued Monday is undeniably rare good news for the US economy. However, the surge in national home sales and home sale prices was driven by home buyers which were rushing to get the home buyer tax credit 2010, which expired at the end of April. Buyers using the credit have until the end of June to close sales. The effects of the subsidy are expected to fade which will leave the real estate market at the mercy of the US unemployment rate.
Forecast beat by existing home sales
Existing home sales increased around 7.6 percent to an adjusted annual rate of 5.77 million units in April from the month before, as outlined by the home sales report released by The National Association of Realtors. Loan lenders arranged transactions for 5.36 million existing home sales in March. Sales were up 22.8 percent in April from the very same month a year ago. CNNMoney.com reports that the gain in national home sales was anticipated, but nevertheless beat forecasts. Briefing.com surveyed analysts looked for resale’s in April to rise to a rat of 5.56 million units.
2010 home buyer tax credit
As buyers counted down to the home buyer tax credit 2010 expiration date of April 30, existing home sales were pushed. Trading in could get you a $6,500 tax credit when new home buyers could get $8,000. Now that there is no longer a home buyer tax credit, the real estate industry is just holding on in fear of the bumpy road ahead. The Wall Street Journal reports that this anxiety grew last week when the Commerce Department reported that even though home construction rose in April, permits for future building fell off a cliff. The drop showed builders are expecting demand to drop for new homes following a 26.9 percent surge in March.
Home sale prices are really pushed by surge
The existing home sale prices rose a bit because of the surge of buyers taking advantage of the 2010 home buyers tax credit. The Washington Post reports the national median existing home price from all different property types — single-family homes, townhouses and condominiums — was $173,100, which is up 2 percent from March and 4 percent from April 2009. April’s bump is the biggest year-over-year price increase given that May 2006. As outlined by the National Association of Realtors, the key to stabilizing prices is clearing out the glut of homes. The group also said the raw number of unsold homes is nearly 12 percent below the July 2008 peak.
Report for national home sales
Other figures within the national home sales report include a rise in total inventory of 11.5 percent at the end of April, representing an 8.4-month supply, up from 8.1-month supply in March. That means it would probably take around 8.4 months to sell all the homes for sale at the current sales pace if no a lot more homes are added to the market. Going forward, existing home sales will be higher than new home sales which is why permits are dropping. Existing homes generally cost less, and a surging rate of foreclosures is filling the market with very cheap deals.
