Increase in home purchase

The amount of signed contracts to buy previously occupied homes increased for the eighth straight month in September as buyers take advantage of a tax credit for first-time owners that expire at the end of this month. The housing market has been trying to bounce back from the worst downturn in decades, being relieved by federal intervention to lower mortgage rates and bring more buyers into the market.

Home resales rose in September to the highest level in more than two years as buyers try to complete their purchases before the tax credit of up to $8,000 for first-time owners expires on Nov. 30. Congress is trying to extend the credit to buyers who sign sales agreements by April 30. Lawmakers  are talking about adding a $6,500 credit for buyers moving into other homes as long as they have been living in their current residence at least five years.

An extended and expanded tax credit would help boost the real estate market.

Home prices may be stabilizing!

Another sign emerged the nation’s struggling housing market may be nearing its bottom. The S&P/ Case Shiller index of home prices in 20 metropolitan areas was up slightly in May over its April  level for the first time since 2006.  Cleveland, Dallas and San Francisco showed the largest gains in May. The Index was the latest surprise following reports showing monthly gains in new -home sales and housing starts nationwide and higher median home sale prices in California. 

The data do show for the first time in quite a few years some potential signs of turnaround. The rapid deterioration in prices has slowed since January.  May has been a busy month for home sales, which usually bumps prices up. The index for May was down by 9/10 of a percentage point from April.

The slowing decline in home prices might mean “the free fall housing has been in is clearly over” but not everyone is confident at all we’re seeing the end of the period of price declines. New Home sales have jumped 11% in June over May. New Home sales were so low in May, however, that even with the double digit percentage increase, June’s new home sales total was still the lowest for the month since 1982.