One report says that home prices are rising, and they are.
But the number of sales are declining. We had strong gains in June and July, but these gains may be due to the $8,000 tax credit getting people that would have been buying anyway in August and September to buy early, skewing the numbers.
Now those sales that would have happened in August and September are not going to happen, as they went rhrought a few months early.
Plus home sales traditionally decline once school starts anyway.
Lawrence Yun, NAR chief economist, says the tax credit is working. “Home sales retrenched from a very strong improvement in July but continue to be much higher than before the stimulus. The first-time buyer tax credit is having the intended impact of bringing buyers into the market, allowing them to take advantage of very favorable affordability conditions,” he says. “Some of the give-back in closed sales appears to result from rising numbers of contracts entering the system, with some fallouts and a backlog contributing to a longer closing process, but the decline demonstrates we can’t take a housing rebound for granted.”
If we look at who was doing the buying – 30% of purchases were from first time home buyers and 31 percent were distressed homes.
But with the expected rise in foreclosures coming in the next 12 months, Yun feels that we need to extend the $8,000 tax credit to keep sales strong.
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