Update1:Buyer Activity Picks Up As Deadline for Homebuyer Tax Credit Nearsby Tim Manni
Update1: As we wrote yesterday, “This week could really give us a sense of homebuyer demand: both existing and new home sales reports are due to be released by week’s end.”
According to the National Association of Realtors (NAR), existing homes sales rose 6.8% last month, a direct result of the homebuyer tax credit’s pending expiration (emphasis added):
Buyers responding to the homebuyer tax credit and favorable affordability conditions boosted existing-home sales in March, marking the beginning of an expected spring surge, according to the National Association of Realtors®.
Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million units in March from 5.01 million in February, and are 16.1 percent above the 4.61 million-unit level in March 2009.
In the early portion of March, NAR chief economist Lawrence Yun seemed a bit less optimistic about the homebuyer tax credit’s impact on homebuyer activity than he does now.
03/10/10 (emphasis added):
“We would anticipate that April, May, June home sales figures will be high if there is a similar buying pattern as last year,” said Lawrence Yun, chief economist for NAR. But so far the extension of tax credit by Congress has generated only a modest increase in foot traffic, he told reporters. And the expansion of the tax credit to existing homeowners or repeat buyers has not generated much excitement either. “Right now there is nothing to indicate we will get that 40% kick” in May or June, Mr. Yun said. “But we are keeping our fingers crossed.”
04/22/10 (emphasis added):
“The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices,” said Yun. “This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure.”
Original Post (published 04/21/10): Much like last year, homebuyer activity is picking up as the deadline to the homebuyer tax credit rapidly approaches. The amount of demand spurred by the credit’s pending expiration could very well be the deciding factor of whether or not lawmakers vote to extend the homebuyer tax credit for a second time.
Mortgage applications increased by the most in nearly two months, according to the Mortgage Bankers Association:
The Mortgage Bankers Association’s index increased 13.6 percent in the week ended April 16. The Washington-based group’s gauge of purchases climbed 10.1 percent and a drop in mortgage rates boosted the refinancing measure by 15.8 percent, the first gain since the end of February.
This week could really give us a sense of homebuyer demand: both existing and new home sales reports are due to be released by week’s end. So far this year, and again like last year, much of the demand is being spurred by first-time homebuyers:
While round two of the program added payouts to existing homeowners making new purchases, the credit still seems to have the most draw for first-timers. The Campbell survey found that 48.2 percent of March’s home purchase transactions were attributable to first-time homebuyers. This eclipsed the previous peak of 46.9 percent reached last October when the November expiration of the original homebuyer tax credit sent purchases by first-time buyers soaring.
“The strong participation of first-time homebuyers this spring is a welcome surprise,” said Thomas Popik, research director for Campbell Surveys. “Many observers had felt that the pool of first-time homebuyers had been depleted last fall, but this is turning out not to be the case. Instead, the normal spring-summer buying season is combining with the tax credit to produce blow-out results for first-time homebuyers.”
Whether or not the homebuyer tax credit receives yet another extension, it doesn’t change the fact that now is still a great time to buy a home (if you can properly afford it, of course). Mortgage rates are still near their historic lows and home prices, according to Reuters.com, are about 30% below where they were in 2006. If you’re interested in beginning the homebuying process, you can click here to find the best mortgage rates in your state.