It goes without saying that the winter months aren’t exactly strong for U.S.home sales.
Compared to the spring, the winter sales season has always left much to be desired.
Even still, the latest figures from the National Association of Realtors now suggests that the home buyer tax credit may have pulled forward quite a bit of demand, making the coming months worse than they may have been otherwise.
From the AP by Alan Zibel entitled: Pending home sales fall 16 percent in Nov.
“The number of buyers who agreed to purchase previously occupied homes fell sharply in November, a sign sales will fall this winter, undermining last summer’s recovery.
The report Tuesday indicates consumers are taking their time following the extension of a tax credit deadline. The incentive of up to $8,000 for first-time buyers was set to expire at the end of November. But Congress pushed back the date and broadened the program with a new credit of up to $6,500 for buyers who relocate
The National Association of Realtors said its seasonally adjusted index of sales agreements fell 16 percent from October to a November reading of 96. It was the first decline following nine straight months of gains and the lowest reading since June.
The drop was far larger than the 2 percent expected from economists surveyed by Thomson Reuters, and analysts were surprised.
“This was bound to happen at some point, although not by this much,” wrote a startled Jennifer Lee, senior economist with BMO Capital Markets. “Gulp,” she added.
“It will be at least early spring before we see notable gains in sales activity as homebuyers respond to the recently extended and expanded tax credit,” Lawrence Yun, the Realtors’ chief economist, said in a statement.
Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer of future sales. Pending sales were down 26 percent from October in the Northeast and Midwest, 15 percent in the South and 3 percent in the West.
The housing market had been rebounding from the worst downturn in decades, aided by aggressive federal intervention to lower mortgage rates and bring more buyers into the market. Sales of existing homes surged in November to the highest level in nearly three years, but analysts expect December sales to show a big drop.
And concerns remain that the market recovery will stall as the federal programs are phased out.
“This sudden drop risks the stability housing markets have enjoyed in recent months,” wrote Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.”
That makes the housing rebound tenuous at best—especially considering that interest rates have nowhere to go but up.
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