Home buying tax credit not enough

Even with the rush to sign contracts before the Apr expiration of the tax credit, May Existing Home Sales (closings where contracts were signed in the 2-3 months prior) were well below expectations at 5.66mm annualized vs the forecast of 6.12mm and down from 5.79mm in Apr. The tax credit still helped as May sales are the 4th highest dating back to mid ’07. The absolute # of homes for sale fell by 3.4% and helped to lower months supply to 8.3 from 8.4 in Apr. The median home price rose 2.7% y/o/y to $179,600, the highest since July ’09. Distressed sales totaled 31% vs 33% in Apr. The NAR said that delays in the mortgage process, “particularly for short sales” are having an impact on the closing process. They also point out that “many potential sales are being delayed by an interruption in the Nat’l Flood Insurance Program” particularly in FL and LA. Notwithstanding the comments, housing post tax credit, is rolling over again.

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