Home Sales Jump Fourth Consecutive Month
Jun 22nd, 2010 by admin
Spurred by a rush of homebuyers attempting to beat the April 31st deadline to qualify for federal tax credits, April saw more sales contracts signed than in any month since last October. In its adjusted index of sales agreements for previously occupied homes, a six percent jump in contracts took place from March to April.
This marks the third month in a row that the numbers have climbed, though many experts expect several months of declines with the expiration of the tax credits. Analysts claim that even with home prices near historic lows, and mortgage rates as well, huge unemployment and fear of losing their jobs will keep many potential buyers out of the market. The region with the biggest gain was the northeast, with a nearly 30 percent increase. All four regions saw a gain.
A Wednesday report from confirms the theory, with home-purchase applications falling for the fourth consecutive week to the lowest total since April 1997. Foreclosures are still flooding in at a brisk pace, as well, and this should lead to prices falling again through the latter part of the year. Investors responded favorably to the rise in sales contracts, as the Dow Jones average jumped 60 points in early trading. There are some analysts who expect, following the immediate plunge in sales after the tax credits expire, a smooth recovery from late summer into the fall.
The sales contracts index serves as an indicator of home sales over the next couple of months, as a deal closing typically comes that long after the contract is signed. President Obama, about a month after taking the Oval Office, signed a $787 billion stimulus plan that included the original $8,000 tax credit for first time homebuyers.
After the plan achieved significant success early on, the November 31st deadline was extended to April 2010 and a $6,500 tax credit for existing homeowners was enacted. To qualify under the new deadline, buyers would have to sign a contract by April’s end and close the deal before June 30th. As of the third week of April more than 2.5 million taxpayers had claimed the credit at a total cost of $18.7 billion dollars.