Monday, December 28, 2009

Housing market mixed as new, existing home sales hit fork in the road

Top 2009 Offbeat News Stories
New home sales tank as resales surge. Experts say reliance upon federal programs reveals underlying weakness in the housing market.

by Broderick Perkins
© 2009 DeadlineNews.Com

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Deadline Newsroom - At year's end, the nation's housing market has become a mixed bag of ups and downs, revealing continued weakness and uncertainty.

Sales of newly built, single-family homes declined 9 percent in November, compared to a year ago, according to the Commerce Department.

On the other hand, existing home sales rose for the tenth straight month in November, and were more than 42 percent above sales a year ago, according to the National Association of Realtors (NAR).

Experts say the home buyer tax credit is partially to blame for the market's wall-eyed behavior.

New-home sales are recorded when a contract is signed. Sales tanked in November when the tax credit was supposed to expire as buyers gave up, figuring they couldn't sign in time to meet the deadline and cash in.

Existing-home sales, which are recorded when a sale closes, leaped because folks had been scrambling for months to finish their deals before the Nov. 30 expiration.

The home buyer tax credit was extended and expanded to include move up buyers, but the damage had already been done, leaving concerns about what's really fueling the housing market.

Experts question how well the housing market will fare after the new home buyer tax credit's expiration next year, particularly if one month's new home sales numbers were so dependent on the tax credit's status.

Other government stimuli, including the Federal Reserve spending $1.25 trillion in mortgage-backed securities to help keep mortgage interest rates low, can't last forever.

"They (sales numbers) also show just how important it was that Congress moved when it did to help spur housing demand by extending and expanding the home buyer tax credit beyond its November deadline. We hope to start seeing the intended effects of that move on buyer demand in early 2010 as families determine their purchasing plans following the holidays," said Tulsa, OK home builder Joe Robson, also chairman of the National Association of Home Builders (NAHB).

But it's not just the tax credit.

"The emerging housing recovery is on a bumpy path that is strewn with obstacles, including the extreme difficulties that builders are encountering in obtaining financing for new projects and inaccurate appraisals that are now scuttling a third of new-home sales. Today’s report reinforces just how fragile the housing recovery remains and the potential damage that any further retardants could cause," said Robson.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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1 comment:

Jeff Green said...

Fantastic article!
Home buyers need this kind of updates to understand the real status of the market behind the home buyer tax credit extension.