Pending Home Sales up 1% in December 2009
Pending sales of previously owned homes edged up as expected in December 2009, after a federal tax credit was reinstated, according to a survey released by the National Association of Realtors. The Realtors report should help to calm fears of renewed weakness in the troubled housing sector.
The pending home sales index rose 1% in December after plunging 16.4% in November, with home buyers reacting first to the expiration and then to the return of the tax credit.
The tax credit, which had been scheduled to end in November 2009, was expanded and extended until June 2010. Its expected expiry had pushed down sales of existing homes in December, when they dropped to their slowest sales pace in four months.
The expanded tax credit gives $8,000 to qualified first-time buyers and $6,500 to qualified repeat buyers, who must sign a contract by April 30, 2010 and close by June 30, 2010 to get the subsidy from taxpayers.
“There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” National Association of Realtors chief economist Lawrence Yun said. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels.”
Yun said he expects about 2.4 million home buyers will take advantage of the tax credit this year.
The home buyer tax credit helped home sales in 2009, as did low home prices and mortgage rates. The housing market is battling high unemployment and difficulty getting mortgage loans.
Realtors projected existing-home sales of 5.66 million this year and 5.70 million in 2011. That compares with 5.19 million in 2009.
Median price for an existing home is projected at $179,800 in 2010 and $187,500 in 2011. It was $173,900 in 2009.
