Home sales dip 2.2 pct despite tax credits
By ALAN ZIBEL
AP Real Estate Writer
WASHINGTON (AP) — Sales of previously occupied homes dipped 2.2 percent in
May, signaling that a boost from home-buying tax credits is fading sooner than
expected.
Last month’s sales fell from the previous month to a seasonally adjusted annual
rate of 5.66 million, the National Association of Realtors said Tuesday.
Analysts who had expected sales to rise expressed concern that the real estate
market could tumble once the benefit of the federal incentives is gone
entirely, starting next month.
Sales have climbed 25 percent from the 4.5 million annual rate hit in January
2009 _ the lowest level of the recession. But they’re still down 22 percent
from the peak rate of 7.25 million in September 2005.
The report counts home sales when a deal closes. So federal tax credits of up
to $8,000 for home buyers likely influenced May’s results. The deadline to get
a signed sales contract and still qualify was April 30. Buyers must close their
purchases by the end of this month.
The tax credits were expected to lift sales in May and June. Lawrence Yun, the
Realtors chief economist, said delays in the mortgage-lending process and put
about 180,000 potential buyers in limbo. He’s unsure if they will qualify by
the June 30 deadline. The trade group is pushing Congress to extend the
deadline for closing a sale until Sept. 30.
The report is “a worrisome sign for what will occur in July and thereafter when
the effect of the tax credit is behind us,” said Joshua Shapiro, chief U.S.
economist at MFR Inc., an economic consulting firm in New York.
The drop in May sales was led by a more than 18 percent decline in the
Northeast. Sales were unchanged in the Midwest, but rose nearly 5 percent in
the West and 0.5 percent in the South.
The inventory of unsold homes on the market dropped 3.4 percent to 3.9 million.
That’s an 8.3 month supply at the current sales pace, compared with a healthy
level of about six months. The median sales price in May was $179,600, up 2.7
percent from a year earlier.
Foreclosures and short sales _ in which the lender agrees to accept less than
the total mortgage _ made up 31 percent of sales in May. First-time buyers made
up 46 percent.
The report “suggests that even government stimulus in the form of a tax credit
isn’t enough,” to support the U.S. housing market, wrote Guy LeBas, an analyst
with Janney Montgomery Scott.