Washington, D.C.–What a difference a year makes. Sales of existing homes–single-family, townhomes, condominiums and co-ops–has significantly outshone last year’s numbers.
All the same, a marked drop in home sales is expected over summer as a result of the expiration of the home buyer tax credit.
May proved to be yet another month of elevated transaction levels, according to the National Association of Realtors (NAR). The federal tax credit has been luring buyers in, as have stabilizing home prices and historically low mortgage interest rates.
While it was not quite as good as April was, May turned out to be a strong month, per NAR’s numbers. Existing-home sales reached a seasonably adjusted annual rate of 5.66 million units, a 2.2 percent decline from April’s 5.79 million units.
Overall, year-over-year numbers tell a better story. Last month’s closings marked a 19.2 percent jump over May 2009. And the figures are even more encouraging for the condo/co-op market, where there was a 32.6 percent increase in sales from May 2009 to May 2010.
“We’ve had a substantial change in the market in terms of consumer psychology,” Walter Molony, spokesman for NAR, tells MHN. “And the flipping is behind us; the typical buyer today is planning to buy for the long term.”
The party, however, is not expected to last into the summer. “The expectation is that there will be one more big month from the tax credits, but there will be a notable decline in July and August,” Molony says.
But economists do have a generally positive forecast for the remainder of the year. “The outlook is very much predicated on job growth,” he adds. “There should be job growth, interest rates should stay affordable, and hopefully, foreclosures will continue to enter into the market in a manageable fashion and be absorbed quickly–that is what will help stabilize the market.”