Monday, May 3, 2010

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.

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