Existing Home Sales Higher As Tax Credit Expired. Original Tax Incentive Stole Demand From Extended Version

by devteam May 24th, 2010 | Share

The National Association of Realtors today released Existing Home Sales data for April 2010.

Excerpts From The Release…

Existing-home sales rose again in April with buyers motivated by the tax credit, improving consumer confidence and favorable affordability conditions, according to the National Association of Realtors®.

Existing-home sales, which are completed transactions that includesingle-family, townhomes, condominiums and co-ops, increased 7.6percent to a seasonally adjusted annual rate of 5.77 million units inApril from an upwardly revised 5.36 million in March, and are 22.8percent higher than the 4.70 million-unit pace in April 2009.

Lawrence Yun, NAR chief economist, said the gain was widely anticipated:

“The upswing in April existing-home sales was expected because of thetax credit inducement, and no doubt there will be some temporaryfallback in the months immediately after it expires, but other factorsalso are supporting the market,” he said. “For people who were onthesidelines, there’s been a return of buyer confidence with stabilizinghome prices, an improving economy and mortgage interest rates thatremain historically low.”

Single-family home sales rose 7.4 percent to a seasonally adjustedrnannual rate of 5.05 million in April from a pace of 4.70 million inMarch, and are 20.5 percent above the 4.19 million level in April 2009.The median existing single-family home price was $173,400 in April, up4.5 percent from a year ago.

Existing condominium and co-op sales jumped 9.1 percent to aseasonallyadjusted annual rate of 720,000 in April from 660,000 in March, andare42.3 percent above the 506,000-unit pace in April 2009. The medianexisting condo price5 was $171,000 in April, which is 0.6 percent below arn year ago.

In the chart below I called attention to the level of Existing Home Sales at the expiration of the original tax credit and the level of Existing Home Sales at the expiration of the extended version. Notice that the expiration of the extended credit failed to match the momentum generated by the original credit. This implies a portion of normally seasonally supportive homebuyer demand was stolen by first time homebuyers when the original tax credit expried at the end of November 2009.


NORTHEAST: +21.1 percent to an annual level of 1.09 million. +41.6 percent YoY. The median price in the Northeast was $243,000, +2.1 percent from April 2009.
: +9.9 percent to annual pace of 1.33 million. +29.1 percent YoY. The median price in the Midwest was $146,400, +5.8 percent from April 2009.
: +8.6 percent to an annual pace of 2.14 million.+23.0 percent higher YoY. The median price in the South was $150,000, +1.2 percent from April 2009..
WEST: -6.2 percent to an annual rate of 1.21 million. +5.2 percent YoY. The median price in the West was $212,400, +3.8 percent from April 2009.

The national median existing-home price for all housing types was$173,100 in April, up 4.0 percent from April 2009.

Single-family median prices rose in 18 out of 20 metropolitanstatistical areas reported in April from a year ago; six of the areasexperienced double-digit increases. In data recently reported for thefirst quarter, 91 out of 152 metros saw price gains.

Total housing inventory at the end of April rose 11.5 percent to 4.04million existing homes available for sale, which represents an 8.4-monthrn supply at the current sales pace, up from an 8.1-month supply inMarch.

Raw unsold inventory is 2.7 percent above a year ago, but remainsrn 11.6 percent below the record of 4.58 million in July 2008.

Lawrence Yun says:

“Although inventory levels remain above normal andmuch of the gain last month was seasonal, the housing pricecorrectionappears essentially over….a return to old-fashionedresponsiblelending and buying will help the housing market avoid disruptive andpainful bubble-bust cycles.”

A parallel NAR practitioner survey shows first-time buyerspurchased 49rn percent of homes in April, up from 44 percent in March. Investorsrnaccounted for 15 percent of transactions in April, down from 19percentin March; the remaining sales were to repeat buyers.

All-cashsalesstood at 26 percent in April; they were 27 percent in March.

Distressed homesaccounted for 33 percent of sales last month, compared with 35percentin March.

More to come….

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of is prohibited.

About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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