First Time Home Buyers
Existing Home Sales fell in February, dropping 30k from January’s figures. This was inline with expectations and is the 4th straight month with lower month-over-month figures.
As we’ve been discussing, the primary driver was the flood of first time home buyers out to meet the original November 2009 deadline for the tax credit.
There were quite a few November transactions that were bumped up from being December, January or February buyers.
If you look at the graph, the trend is holding up and pointing towards a very busy spring market.
When the federal home buyer’s tax program was extended last year, the new rules stated that home buyers must be under contract for their new, respective homes on, or before, April 30, 2010 in order to claim up to $8,000 in federal money. That deadline is approaching and many markets are experiencing a surge in buyer traffic as April 30 nears.
The Existing Home Sales data doesn’t reflect this new demand, nor the number of new contracts written. It only accounts for home closings and, in February, closings were down. That’s more reflective of offers from December and January than home shopping activity in February and March.
For today’s buyers, the market looks favorable. The federal tax credit is in place, mortgage rates stubbornly stick near all-time lows, and home prices are staying in check.
Existing Home Sales should gain through March and April, pressuring home prices higher. And, by the time the press reports the gains, the best deals in the city may already be gone. Consider acting sooner rather than later.
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