With many economic and real estate experts anticipating dismal sales right through 2010, the final numbers tallied up for the end of February have resulted in a bit of surprise. February is consistently a poorly performing month for real estate sales; the weather is poor and the spring housing market has usually not yet perked up. Yet, the number of pending home sales in February are up a whopping 8.2 percent since January, according to NAR.
Winter weather across most of the country was partly responsible for poor real estate numbers over most of the winter in addition to the annually lower winter sales; but where normally the spring pick up starts in March, this year has seen a surprising pickup in sales already in chilly February.
The increased pending home sales are undoubtedly a result of the countdown to the expiration of the current extension of the home buyers’ tax credit which requires that a binding sales contract is signed no later than April 30th with a completed closing by June 30th.
In the fall, when the countdown to the original home buyers’ tax credit was due to expire, there was a huge rush for home buyers to cash in on this government program. Many home buyers took advantage of the program and rushed to buy a home before the anticipated expiry date. However, since the program had encouraged so many home buyers to purchase a home, the government decided to extend the program until April 30th and also open it up to more than just first time home buyers as well.
Unfortunately, this extension to the home buyers’ tax credit did not seem to encourage many buyers to purchase homes until recently. It’s difficult to know what effect there was over December and January, if any, but it is evident that the closer to the cut off that we get, the more people are pushing to get a binding contract signed so that they can take advantage of it.
Across the country, real estate recovery is essential to the health of the economy; even if this resurgence is temporary it is supportive of economic recovery; hopefully that the ending of this program won’t also result in the end of any growth in home sales for the year as well. Only time will tell if the reawakened interest in home buying will continue into the year.
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