Existing Home Sales Flatten And Point To A Much Better Spring

As expected, Existing Home Sales fell in February, slipping 30,000 units versus January’s numbers. It’s the 4th straight month in which Existing Home Sales were lower, month-over-month.

In case you didn’t know, an “existing” home is one that is previously owned and lived-in (i.e. not new construction).

In November 2009, Existing Home Sales peaked just as the First-Time Home Buyer Tax Credit was set to expire. Right after, according to the National Association of Realtors®, monthly sales plunged 17 percent in December, then another 7 percent in January.

Comparatively, February’s dip is a modest 0.6 percent and is more in line with the pre-tax-credit Existing Home Sales trend.  The real estate market is rediscovering its normal.

But “normal” may not last for long – and that’s a good thing.

When the federal home buyer’s tax program was extended last year, the new rules stated that home buyers must be under contract for their new, respective homes on, or before, April 30, 2010 in order to claim up to $8,000 in federal money.  That deadline is approaching and many markets — Houston included — are experiencing a surge in buyer traffic as April 30 nears.

The Existing Home Sales data doesn’t reflect this new demand, nor the number of new contracts written. It only accounts for home closings and, in February, closings were down.

For today’s buyers, the market looks favorable. The federal tax credit is in place, mortgage rates stubbornly stick near all-time lows, and home prices are staying in check which are giving people great opportunities to buy.

In my opinion, Existing Home Sales should go up through March and April, pressuring home prices higher, so you should consider acting sooner than later.

By the time the press reports the gains, the best deals in the city may already be gone.

Tags: Existing Home Sales, tax credit | Category: Existing Home Sales |