Bolstered by first time homebuyers taking advantage of the $8,000 tax credit, the sale of previously-owned homes was up 9.4% in September. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” explains National Association of Realtors chief economist Lawrence Yun.
The strongest market regionally was the West, where sales climbed 13%, which was 5.7% higher than last year. Still down 15% from last year, the median price of homes sold during the month was $219,000.
In the Midwest, sales were up by 9.6%, which was 7.8% higher year-over year. Median home price here was $147,600, down 1% since 2008.
Sales in the South were up 9% from August and 10.8% from last September to a rate of 2.6 million. Median home price has dropped 7.6% to $153,500 in the past 12 months.
The slightest rise was in the Northeast, with existing sales up 4.4% from August. The median price there was $234,700, down 7.6% from last year.
“We’re getting early indication of price stabilization but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy,” Yun said.
Despite this most recent boost in September, experts say the housing market is still underperforming as home values continue to decline. Nationwide, the median price of homes sold in September was $174,900, falling 8.5% from a year earlier. An influx of distressed properties, foreclosures, and short sales are blamed for the price drop in prices.
To help boost home prices and sales, lawmakers are considering extending the tax credit and expanding it to all but the wealthiest homebuyers. Although few would argue the successful impact the tax credit has had on home sales, senior economist Robert Dye explains that an extension would only induce a temporary effect until the program stopped, similar to the Cash for Clunkers incentive.
“First-time homebuyers don’t represent the bulk of the market and there is strength well beyond them,” said Dye. “If economic indicators such as consumer confidence show improving trends, then experienced homebuyers will stay in the market and take advantage of [the low] prices” even without the credit.