Existing Home Sales Decline

January 29, 2010

A real-estate industry report released this week showed existing home sales fell in the month of December.  According to the National Association of Realtors, existing home sales dropped 16.7% nationally. This is the largest monthly drop on record in 40 years.

Existing home sales totaled 5,156,000 in 2009, higher than the previous year by 4.9%.  Sales were expected to decline on average 10% through the month December, due to the expiration of the first time home buyer tax credit, which was extended to April 30, 2010 and expanded to include a $6,500 tax credit to existing homeowners.

PNC senior economist, Craig Thomas says, “this is a huge blow, much bigger than we expected”, adding,“Unfortunately, we’ll continue to see this kind of volatility as economic supports like the tax credit are taken away”.

Inventories, which had been trending lower, unexpectedly rose again in the month of December to an 8.1-month supply at the current sales pace.   The median home price also fell 3.6% during the month of December.  As long as inventories remain above a 5-month supply, home prices will remain soft in most regions of the country.

It is clear that many potential home buyers were motivated to buy as a result of the first time home buyer tax credit.  Analyst are predicting a surge in home sales once again as the tax credit deadline of April 30, 2010 approaches.  Analyst are also warning the market watchers to be aware that the predicted surge is not an indication of lasting recovery.

Related posts:

  1. First Time Home Buyer Tax Credit Deadline Looms
  2. Making Home Affordable?
  3. Mortgage Rates Drop as Unemployment Rises
  4. Pending Home Sales Drop, Market Looks Bleak
  5. Tax Credit Helps Homes Sales Increase

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