The housing reports released over the week showed some encouraging signs, but also raised concerns about further stabilization if the government does not extend and expand the homebuyers tax credit.
Currently, first-time homebuyers are eligible for an $8,000 tax credit that will be stopped at the end of November.
The benefits to the market from this program are expected through September. However, these advantages will decline after that since it has been taking about 60 days to close on a mortgage after a contract is offered, the National Association of Realtors (NAR) reported.
Meanwhile, New Home Sales for August increased less than expected to 429,000 from a consensus call of 440,000. In addition, July was revised downward to 426,000 from a previously reported 433,000. By region, only the West reported gains while the South was flat. The Northeast and Midwest were lower. The median sales price was $195,200 in August, down nearly 12% from a year ago. The months' supply improved to 7.3-months from 7.6-months.
Existing Home Sales in August declined 2.7% to a seasonally adjusted annual rate of 5.10 million units. Analysts had projected a 2.1% increase to 5.35 million. The months' inventory improved to 8.5-months from 9.3-months. The median price was $177,700, down 12.5% from a year ago. All four regions of the country experienced declines in August. The NAR said that 30% of purchases were first time homebuyers, and that distressed home represented 31% of transactions. Both remained unchanged from July.
The Federal Housing Finance Agency (FHFA) House Price Index rose a seasonally adjusted 0.3% in July from June and is down 4.2% year over year. The FHFA also reported a downward revision to June's increase to 0.1% from a previously reported 0.5% increase. From the April 2007 peak, home prices are off 10.5%.