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tax credit spurs jump in existing home salesTax credit spurs jump in existing home sales
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The inventory of unsold existing homes fell 294,000 homes (7.5%) last month, dropping the months’ supply of unsold homes to 7.8 from 9.3. While the excess inventory situation is improving it did not improve as much as the raw data suggest. A substantial share of the big drop was due to the artificial spike in sales from federal pump priming and the usual seasonal decline in home for sale listings at the end of the summer.
The months’ supply of inventory needs to drop to about 5 to cause a clear rise in home prices and a more normal competitive situation for homebuilders with existing homeowners. This still looks likely in mid 2010. Until then, homebuilders should expect sales gains to be modest overall with some monthly setbacks.
Congress is considering extending the home purchase tax credit beyond November because it is “popular”. This is no surprise. An $8,000 gift from fellow taxpayers is very popular. However, there may now be a majority in Congress that is unwilling to add several tens of billions to the ballooning federal deficit. Extension of the credit is not a certainty, especially with recent reports of substantial fraud in the initial home purchase tax credit claims.
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Member Comments
The exended credit has not yet passed both houses of Congress but it will soon and will produce another burst of homebuying duringf thew winter.
Perhaps this could be the lean season for the real estate industries, as there had been drop on it’s sales the Congress had passed the Homebuyer tax credit 2010. It extends the tax credit to 2010, although the credit is reduced to $6500. There are limitations: If you fit the criteria, the homebuyer tax credit 2010 extensions might save you a pay day loan or two. You qualify if you haven’t owned a home in 3 years (first timers included) or have owned your current residence for more than 5 years, …
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