Home Buyer Tax Credit Spikes Home Sales
The National Association of Realtors reports existing home sales showed big gains in October “with a strong uptrend established over the past seven months.” The NAR says the increase in existing homes sales can be traced back to the first-time buyer tax credit.
But what the NAR is particularly excited about is that the first time home buyer tax credit has been extended. In fact, potential home buyers have until April 30 to have a contract in place. This could have a long-term impact on existing homes sales as new buyers come out of the woodwork.
However, for buyers to take advantage of the extension, potential home buyers must have a signed contract on a house by April 30, 2010. Then, with the signed contract in hand, buyers must close on the house and take possession by June 30, 2010.
Although the numbers are positive, NAR chief economist Lawrence Yun warns that the spike in existing home sales means December and early 2010 will probably see a “measurable decline before another surge in spring and early summer.”
Something else that is impacting the real estate market is low mortgage rates. The average 30-year rate declined to 4.91% from 4.98%. The 15-year rate was 4.36%. The low rates come as the central bank pledged to buy up to $1.25 trillion in mortgage-backed securities bonds.