U.S. New Home Sales Pace Slows 11 Percent In November

The key to the real estate market is the move up buyer re-entering the market. New homes are preferred by many in this segment of the market. The overall economy will not improve unless builders can start building and selling their homes.

If Mr. Vitner is correct that “the tax credit put a Band-Aid over the housing problem and in October and November we ripped it off”, then the extended tax credit, which is in effect now and is set to expire at the end of April, might have a large effect on home sales in May. The Los Angeles Times is reporting that the credit won’t be extended again:

Proponents of the $8,000 credit for first-time buyers and the $6,500 credit for move-up buyers made it clear during the debate on Capitol Hill that the benefits would not be renewed when they expire. And a lobbyist for the National Assn. of Realtors confirmed that at the group’s annual convention last month. Lawmakers “made us promise practically in blood that we would not come back” for another extension, Linda Goold, the Realtor group’s director of tax policy, told her members.

So if the extended credit just pulled a lot of so-called “move up buyers” into the market ahead of when they usually would have “moved up” anyway, we should have a measureable drop-off in May, 2010.