The housing market responded unkindly once again as the federal tax credit expired. The National Association of Realtors tracks pending existing home sale, and recently reported that the index they use to track contracted sales fell 2.6% to 75.7%. This number is down from Junes reporting of 18.6%.
In anticipation of the federal tax's credits expiration in April existing home sales fell. The National Association of Realtors reported a 30% drop in the index in May of 2010. Economist agree that the rush to close by September 30th gives little time for new borrowers to enter the housing market, sign on the dotted line, and close by the deadline. That translates into a possible stall in existing home sales during the 4th quarter. Many realtors believe that the impending tax credit flushed out nearly all of the potential buyers, and once the expiration has passed there are going to be little to no buyers left in the market. The fear is that every buyer that was ready or potentially ready rushed to close on a deal to qualify for the tax credit. The 4th quarter is expected to see a severe drop in existing home sales.
The National Association of Realtors also released index reports that showed regional existing home sales that were pending closure. Sales in the northeast dropped 12.2%. Midwest sales fell 9.5%, and "Western sales fell slightly by 0.2%. The only region that saw an increase in sales was the south where sales rose by 3.7%.
As somber as the sales numbers may appear, many within the housing market say that they are happy that the tax credit is expiring. They insist that the constant support of the federal government has made it impossible for market analysts to get a true and accurate measurement of the health of the market. The belief of many analysts is that the ship has to find its natural buoyancy. It is only then that the true numbers will be revealed.
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