Existing-Home Sales Rise 6.8% in March

By Stephanie Armour, USA TODAY

With a tax credit for first-time and repeat home buyers expiring next week, a report Thursday suggests the stimulus hasn't been as effective as a similar credit that dramatically increased home sales late last year.Existing-home sales rose 6.8% to a seasonally adjusted annual rate of 5.35 million units in March from 5.01 million in February, according to the National Association of Realtors. That was also about 16% higher than in March 2009.Last fall, home sales peaked at a 6.5 million annual rate, according to Moody's Economy.com. This spring, they're expected to peak at a 5.7 million annual rate in May.

MORTGAGE RATES: Unchanged from last week."This credit appears to be a shadow of the November credit," says Mark Zandi, chief economist of Moody's Economy.com.The national median existing-home price was $170,700 in March, up 0.4% from March 2009.Distressed homes, typically sold at a 15% discount, accounted for 35% of sales last month - unchanged from February, the National Association of Realtors reported."It doesn't look, at least, that there's been the kind of boom we had last time," says Joel Naroff at Naroff Economic Advisors. "But we have to give it one more month. We have to see April."Total housing inventory at the end of March rose 1.5% to 3.58 million existing homes available for sale, which represents an eight-month supply at the current sales pace, down from an 8.5-month supply in February.The tax credit, which requires a binding contract be signed by April 30 and a deal that closes by June 30, wasn't the only factor behind March's gains. Better weather than in February is believed to have helped, too.In addition, the Federal Housing Administration announced that it is increasing its mortgage insurance premium from 1.75% to 2.25% of mortgages it guarantees. This premium increase, which took effect in early April, was behind a recent five-week surge in mortgage applications, says Brian Bethune at IHS Global Insight."I don't think (the tax credit) has had any impact at all," Bethune says. "You do see it boosting sales a little bit. Maybe it's had a quarter of the effect that the other one did."The current tax credit provides up to $8,000 for first-time home buyers and up to $6,500 for move-up buyers. An earlier tax credit of $8,000 for first-time buyers expired Dec. 1."The biggest benefit is to first-time buyers, and a lot have already taken advantage of it, so we have a smaller potential pool in this go-round," Zandi says.

Home Prices Rise in three California cities

A trio of California cities bucked a nationwide home price decline in February while most of the other metro areas posted losses or flattened out, underscoring the resurgence of the Golden State's coastal markets, data released Tuesday showed.The Standard & Poor's/Case-Shiller index of 20 metropolitan areas was down 0.1% from January on a seasonally adjusted basis, marking the closely watched measure's first decline since home prices began to recover last June.But in a positive sign for housing, the index posted a 0.6% increase from February 2009, its first year-over-year increase in more than three years.The mixed readings come as the expiration of a federal tax credit for buyers looms at the end of this week. Many analysts expect home prices to decline once the incentive runs out — but not nearly as steeply as when values entered a nearly three-year free-fall in the summer of 2006 that helped drag the U.S. into one of the most brutal recessions since the Great Depression.
"Generally, I don't see an upbeat picture, I see the trend as faltering," said David Blitzer, chairman of Standard & Poor's Index Committee. "One of the few spots that seems surprisingly strong is California."California cities saw home prices in February gain 0.8% in San Diego, 0.4% in San Francisco and 0.2% in Los Angeles.Mark Zandi, chief economist with Moody's Economy.com, said the strong showing in California reflected the reduction in foreclosures on the market over the last year. Foreclosures made up 44.3% of the resale market in February, down from an all-time high of 58.8% in February 2009, according to San Diego research firm MDA DataQuick."California is perhaps the most efficient state in respect to resolving its foreclosure issue and so a lot of properties were pushed through the process," Zandi said. "There are now fewer in the pipeline."Although foreclosures may increase in California in coming months, leading to a period of flat prices and perhaps even some declines, the state was "much further along in getting its house in order than most parts of the country," he said.Not reflected in the Case-Shiller numbers are regions in the state farther from the coast where overbuilding was more prevalent and the unemployment rate remains above average, said Richard Green, director of USC's Lusk Center for Real Estate."We are doing a little better than the rest of the country, and that is not particularly surprising because California, in general, didn't overbuild the way Arizona and Las Vegas and Florida did," Green said. "In the places we did, prices collapsed so much it's hard for them to fall much further."In the next two months, some California shoppers have a shot at as much as $18,000 worth of tax credits if they get their timing right.The federal tax-credit program, set to expire Friday, provides up to $8,000 for first-time purchasers and as much as $6,500 for some current homeowners. To qualify for that credit a buyer must sign a contract on a home by April 30 and close the deal by June 30.Adding to that incentive is a statewide credit, which was approved by lawmakers last month and kicks in May 1, for as much as $10,000 for first-time buyers and those purchasing newly built homes.The Case-Shiller index covers three months of data beginning in December, when sales began a three-month slump after what was to have been the federal tax credit's Nov. 30 expiration; Congress in November extended the credit. February's sales data capture that plunge and the traditionally slow winter months. Home sales picked up again in March, and many expect that trend to continue at least through April.Along with the California cities, Las Vegas eked out a 0.1% gain. Fourteen cities posted declines in February over January, with the biggest losses in Portland, down 1.9%; Dallas, falling 1.4%, and Chicago, down 1%. Two cities were flat for the month.