Tuesday, November 10, 2009

U.S. Home Sales Rise to Two-Year High on Tax Credit

After struggling for the better part of the last two years, it looks like the real estate industry is finally rebounding as the third quarter of this year represented the largest increase of home sales in two years. Much of this increase can likely be attributed to the homebuyer’s credit, which was due to expire at the end of this month. However, other financial experts are asserting that many of the buyers who used the credit would have purchased a home anyways. Checkout the following story from Bloomberg.com on the new report.

U.S. home sales increased 11 percent to a two-year high in the third quarter as an $8,000 tax credit for first-time buyers boosted demand.

Sales of existing single-family homes and condominiums increased to 5.3 million at an annualized, seasonally adjusted rate from the previous quarter, the National Association of Realtors said today. The median price fell 11 percent from a year earlier to $177,900, the Chicago-based trade group said.

Distressed sales accounted for 30 percent of all transactions, down from 36 percent in the second quarter, the Realtors said. President Barack Obama signed legislation on Nov. 6 extending the housing credit that was set to expire at the end of this month. Demand from buyers seeking to use the benefit reduced the inventory of previously owned homes for sale to 3.63 million in September, the lowest since January, the group’s data show.

“What the tax credit did was make the housing market stronger by borrowing from future sales,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “There’s payback after it expires in 2010 -- we’ll see weaker demand.”

The sales gain to 5.3 million was the highest since the third quarter of 2007, when sales were 5.45 million.

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