The National Association of Realtors’ U.S. Pending Home Sales Index hit 102.9 in March, up 5.3 percent from February (97.7) and up 21.1 percent on a year-over-year basis (85.0 in March 2009). An index of 100 equals the average level of contract activity in 2001.
In the West the index rose 1.9 percent to 99.9 in March, up 8.8 percent year-over-year.
With Federal tax credits having expired at the end of last month we expect to see another bump in the April numbers, but then all bets are off for May.
∙ Pending Home Sales on an Upswing [realtor.org]
∙ Pending U.S. Home Sales Inch Up, Closed San Francisco Sales Fall [SocketSite]
double dip here we come….
we have a long ways to go
The old “tax credits expiring” conversation. Not everyone qualified for the federal tax credits, so that can’t be the entire explanation. And for those who did qualify, I’m sure that $8,000 or $6,500 had little to do with their decision to buy a house.
Most asset classes have increased, and that has nothing to do with federal tax credits. It has a lot to do with consumer confidence
The bottom was last year, and my prediction still is sideways within a 5% band for the next several years.
at least in the bay area, i have a hard time believing an $8k tax credit was driving the market
In response to NOTSEXY’s post: that’s what she said.
The tax credit may not have driven the market, but it might have encouraged those who were planning to buy to act sooner.
Although the tax credit wasn’t much of the purchase price of the home, that coupled with the April California tax credit and the 3% you can get back from any seller these days was certainly a good chunk of the downpayment and closing costs on an entry level purchase via an FHA loan. For many buyers, all those programs plus an FHA loan meant NO downpayment, NO closing costs and the first payment in every year for the first three years was free too.
If FHA loans are 35% of the market, then 35% of people who could have bought a home for $X no longer can afford it because they won’t have the down payment or can’t justify the costs. So its loss is going to affect the market. Will be a bit worse when the CA credit gets used up.
what is this “3% you can get back from any seller” you speak of?
I know NVJ likes these folks; perhaps, they are getting a bit more cautious? Lakshman Achuthan, managing director at the Economic Cycle Research Institute (ECRI), says the firm’s leading indicators do suggest we’re going to see a slowdown ahead. But the firm is not expecting the double-dip recession that some bears are still calling for.
yea tipster what are you talking about, getting 3% back from any seller these days…You talking realtor comish?
I’m hardly the mortgage broker, but my understanding is that you can get 6% back from an FHA seller, but that is being (or may have already been)reduced to a mere 3%, essentially the entire down payment. So FHA is basically zero down, and then the tax incentives are basically kickbacks that mean you can skip mortgage payments.
http://thelancasterconnection.com/2010/01/20/did-fha-just-throw-first-time-buyers-in-front-of-the-bus-for-a-pr-gain/
Here is another program where Fannie Mae will kick back 3.5% of any foreclosed property you buy from them. Not a big deal because FNM foreclosures aren’t a huge part of any market, but get this:
“Now, the one caveat is that the lender for the buyer must approve the use of this incentive, but most lending programs allow the use of seller assistance with closing costs.”
http://thelancasterconnection.com/2010/01/29/fannie-mae-offers-closing-cost-assistance-and-appliance-incentive/
So you have to figure that even the 20% down crowd is able to shave that to 17%.
I think that for a lot of people, they don’t have two nickels to rub together. No apartment manager will rent to them. But FHA will give them three quarters of a million dollars, and the federal and state governments will make sure they can skip a few payments for the first few years via various tax rebates, if they just keep the bubble inflated for a little longer, long enough for your betters, the bankers, to unload their loans without too much of a loss.
Not hard to see where this is headed, is it?