Tax Credits Pushed Existing Home Sales Up 8% in April

MortgagesThe homebuyer tax credits ended April 30, pushing sales of existing homes up 7.6 percent to an annual rate 5.77 million units in April, from an upwardly revised 5.36 million units in March, according to the National Association of Realtors.
That’s 22.8 percent higher than the 4.70 million units reported in April 2009.
The April jump was anticipated based on a boost generated in March from the tax credits, although home sales were lackluster in January and February.
Housing market analysts now expect some degree of a pullback in sales, as the tax credits likely siphoned some seasonal home-buying interest from summer activity.
On the positive side, mortgage rates are expected to stay below 5 percent in a partial response to the European debt crisis and a possible softening of the U.S. economic recovery. Home prices are seen as stabilizing somewhat, although the foreclosure crisis has not begun to abate.
“No doubt there will be some temporary fallback in the months immediately after (the tax credit deadline), but other factors also are supporting the market,” said Lawrence Yun, NAR chief economist. “For people who were on the sidelines, there’s been a return of buyer confidence with stabilizing home prices, an improving economy and mortgage interest rates that remain historically low.”
However, total housing inventory by April 30 climbed to 11.5 percent to 4.04 million existing homes available for sale, an 8.4-month supply at the current sales pace, up from an 8.1-month supply in March. Raw unsold inventory is 2.7 percent above a year ago, but remains 11.6 percent below the record of 4.58 million in July 2008, the NAR said.
“Although inventory levels remain above normal and much of the gain last month was seasonal, the housing price correction appears essentially over,” Yun said. “In fact, a majority of the markets have seen price gains recently. A return to old-fashioned responsible lending and buying will help the housing market avoid disruptive and painful bubble-bust cycles.”
The national median existing-home price was $173,100 in April, up 4 percent from April 2009. Distressed homes accounted for 33 percent of sales last month, compared with 35 percent in March.

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