May 24, 2010
Existing Homes Sales Rise on Economy, Tax Credit (CNBC)
Diana Olick, CNBC
Existing Home Sales Rise on Tax Credit, Economy
Home sales surpassed expectations for April as government incentives provided a temporary boost to the housing market including luxury homes in Atlanta.
The National Association of Realtors said Monday that sales of previously owned homes rose 7.6 percent to a seasonally adjusted annual rate of 5.77 million. That was the best showing in five months and better than the 5.63 million units economists had expected.
The increase in sales sparked a rise in home prices. The median price for a new home rose to $173,100, up 4 percent from a year ago.
The federal government provided a big boost to home sales this spring by offering first-time buyers a tax credit of up to $8,000. Homeowners looking to upgrade were able to qualify for a credit of up to $6,500. The deadline for getting a signed sales contract was April 30.
Sales were up in all parts of the country except the West. The gains were led by a 21.1 percent jump in the Northeast and a 9.9 percent rise in the Midwest. Sales also rose 8.6 percent in the South.
The only region of the country that saw sales decline was the West, where sales dropped by 6.2 percent from March.
The big question facing the housing market is what happens now that the government’s tax credits have expired.
“No doubt there will be some temporary fallback in the months immediately after it expires,” said Lawrence Yun, chief economist at the Realtors.
But Yun said that the improving economy has led to an upswing in consumer confidence, which should help support sales in the months ahead.