Home Buyer Tax Credits Prop Up U.S. Home Sales in April

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According to the latest existing-home sales report by the National Association of Realtors, rose again in April with buyers motivated by the tax credit, improving consumer confidence and favorable affordability conditions.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April from an upwardly revised 5.36 million in March, and are 22.8 percent higher than the 4.70 million-unit pace in April 2009.  Monthly sales rose 7.0 percent in March.

Lawrence Yun, NAR chief economist, said the gain was widely anticipated.  "The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market," he said.  "For people who were on the sidelines, there's been a return of buyer confidence with stabilizing home prices, an improving economy and mortgage interest rates that remain historically low."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.10 percent in April from 4.97 percent in March; the rate was 4.91 percent in April 2009.

Total housing inventory at the end of April rose 11.5 percent to 4.04 million existing homes available for sale, which represents an 8.4-month supply at the current sales pace, up from an 8.1-month supply in March.  Raw unsold inventory is 2.7 percent above a year ago, but remains 11.6 percent below the record of 4.58 million in July 2008.

"Although inventory levels remain above normal and much of the gain last month was seasonal, the housing price correction appears essentially over," Yun said.  "In fact, a majority of the markets have seen price gains recently.  A return to old-fashioned responsible lending and buying will help the housing market avoid disruptive and painful bubble-bust cycles."

The national median existing-home price for all housing types was $173,100 in April, up 4.0 percent from April 2009.  Distressed homes accounted for 33 percent of sales last month, compared with 35 percent in March.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said buyer traffic is mixed.  "It looks like the level of home sales that close in May and June will stay elevated, but many buyers remain in the market even without the tax credit," she said.  "Some Realtors® tell us they are very busy with clients who are entering the market now as a result of improved conditions, while others are welcoming a slowdown from frantic market conditions in recent months.

"Buyers are focused on finding the right house and taking advantage of favorable affordability conditions.  For many buyers, owning a home is a lifestyle choice.  They want a place of their own to raise a family, build memories, and be part of a larger community," Golder said.

A parallel NAR practitioner survey shows first-time buyers purchased 49 percent of homes in April, up from 44 percent in March.  Investors accounted for 15 percent of transactions in April, down from 19 percent in March; the remaining sales were to repeat buyers.  All-cash sales stood at 26 percent in April; they were 27 percent in March.

Single-family home sales rose 7.4 percent to a seasonally adjusted annual rate of 5.05 million in April from a pace of 4.70 million in March, and are 20.5 percent above the 4.19 million level in April 2009.  The median existing single-family home price was $173,400 in April, up 4.5 percent from a year ago.

Single-family median prices rose in 18 out of 20 metropolitan statistical areas reported in April from a year ago; six of the areas experienced double-digit increases.  In data recently reported for the first quarter, 91 out of 152 metros saw price gains.

Existing condominium and co-op sales jumped 9.1 percent to a seasonally adjusted annual rate of 720,000 in April from 660,000 in March, and are 42.3 percent above the 506,000-unit pace in April 2009.  The median existing condo price5 was $171,000 in April, which is 0.6 percent below a year ago.

Regionally, existing-home sales in the Northeast surged 21.1 percent to an annual level of 1.09 million in April and are 41.6 percent higher than a year ago.  The median price in the Northeast was $243,000, up 2.1 percent from April 2009.

Existing-home sales in the Midwest rose 9.9 percent in April to a pace of 1.33 million and are 29.1 percent above a year ago.  The median price in the Midwest was $146,400, up 5.8 percent from April 2009.

In the South, existing-home sales increased 8.6 percent to an annual level of 2.14 million in April and are 23.0 percent higher than April 2009.  The median price in the South was $150,000, up 1.2 percent from a year ago.

Existing-home sales in the West fell 6.2 percent to an annual rate of 1.21 million in April but are 5.2 percent above a year ago.  The median price in the West was $212,400, up 3.8 percent from April 2009.

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