NAR credits tax credits for propelling market
By Inman News, Tuesday, June 22, 2010.
Closings for existing-home sales were up 19.2 percent year-over-year in May — a robust rate of activity the National Association of Realtors attributed to the federal homebuyer tax credit program.
“We are witnessing the ongoing effects of the homebuyer tax credit, which we’ll also see in June real estate closings,” said Lawrence Yun, the association’s chief economist, in a statement.
Closed sales transactions of existing single-family homes, townhouses, condominiums and co-ops were at a seasonally adjusted annual rate of 5.66 million units last month, down 2.2 percent from April’s upwardly revised 5.79 million units, the report said.
The association expects sales to decline after the homebuyer tax credits’ scheduled closing deadline at the end of June — though legislation is in the works that seeks to extend the closing deadline through September.
“Job growth and a manageable level of foreclosures are keys to sales and price performance during the second half of the year,” the report said.
A NAR survey showed first-time homebuyers accounted for 46 percent of all home purchases in May, down from 49 percent in April, while investors accounted for 14 percent of home sales that month. Repeat buyers made up the remaining share of sales.
Raw unsold inventory was up 1.1 percent year-over-year in May, though it fell 3.4 percent month-to-month to 3.89 million existing homes. That volume of homes represents an 8.3-month supply of homes at the current sales pace, down slightly from April’s 8.4-month supply.
That year-over-year rise in inventory “is especially concerning because the reported inventory is already historically very high, and the 8.3 months of supply in May is well above normal,” observed the financial and housing blog Calculated Risk.
“The months of supply will probably stay near this level in June, because of more tax-credit-related sales (reported at closing), but the months of supply could be close to double digits later this year.”
According to NAR’s report, distressed homes made up a slightly smaller share of sales in May — 31 percent — compared with 33 percent the month before and in May 2009. At the same time, the national median price for all existing homes was $179,600 in May, a 2.7 percent increase from May 2009, the report said.
Existing-home sales in all regions jumped by double digits in May compared to the same time last year. The South saw the biggest jump, at 22.9 percent. The Northeast saw the smallest increase, at 12.7 percent. That region was also the only one to see a year-over-year drop in median price: up 2.2 percent to $240,200.
Meanwhile, the median price in the Midwest was up 2.2 percent year-over-year, to $150,700. In the South, the median price edged up 1 percent compared to a year ago, to $159,000. The West’s median price saw the biggest rise, up 7.4 percent to $221,300.
A separate report released today by the California Association of Realtors found that sales of existing single-family detached homes in the state rose 1.2 percent year-over-year in May, while the median price rose a whopping 23.2 percent to $324,430. Sales rose 14.1 percent compared to April.
“Home sales posted their third-largest increase on record for May, due in part to first-time homebuyers who timed the open and close of escrow in order to capitalize on both the federal and state tax credits,” said Steve Goddard, C.A.R.’s president, in a statement.
“May also marked the fifth month of double-digit gains in the median price, indicative of strong buyer demand relative to the supply of homes for sale. With a 4.6-month supply of homes for sale, unsold inventory continues to be well below the long-run average of seven months, and will continue to drive price appreciation over the next several months.”
A six-month supply of inventory is considered a rough equilibrium between a buyer’s market and a seller’s market, with an inventory above six months sometimes indicating a buyer’s market. All homes under $1 million in California now have a less-than-six-month inventory.
Another report by the Federal Housing Finance Agency, also released today, showed that U.S. house prices fell 1.5 percent year-over-year in April — a smaller decline than the 6.9 percent drop observed between April 2008 and April 2009.
Prices rose 0.8 percent month-to-month in April, which the FHFA partially attributed to the homebuyer tax credit program. The agency based its numbers on the purchase prices of houses with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac.