Home Sales Continue To Flourish Nationwide

Despite a down economy, one thing continues to surge month after month; home sales.  For the second month in a row in October, home sales climbed to the highest level in 2 ½ years thanks to the tax credit.  In all, home sales are up nearly 36 percent from January, but are still 16 percent below where they were at in autumn 2005. 

Because of the tax credit, first-time home buyers are jumping at any and every opportunity they can.  There is only a 7-month supply of homes on the market if things stay on the same sales pace which is precisely why the bidding wars have begun.

One example of many around the country is a couple who bid on 20 Las Vegas homes before finally closing on a four-bedroom home for $136,000. 

Home resale's are on the rise as well according to the National Association of Realtors.  These have risen 10.1 percent to an adjusted annual rate of 6.1 million in October.  This was easily the biggest increase in a decade.

Sales were up 21 percent from a year ago and are officially up in all four regions of the country now.  The Midwest is seeing the highest increase with gains of 26 percent.  The Northeast was not far behind with sales up 25 percent.  The South was right behind with a 23 percent while the West has seen sales rise by 10 percent.

There is no question why sales have increased over the past year.  With prices lower than they have been in a long time and the federal programs offered to help lower mortgage rates, far more people are considering buying.  The overall median sales price as just $173,000 last month, which was down 7 percent from a year ago and even 2 percent from September. 

If prices were not low enough, many experts predict they will fall another 5 percent to 10 percent by next spring.  The government is countering the trend with the more than intriguing tax break for first-time buyers while keeping mortgage rates around 5 percent as well. 

With the tax credit of up to $8,000 for first-time owners ending on November 30, Congress pulled the gun and extended it.  Now, even those who have owned their home for at least five years can claim a tax credit of up to $6,500 for a home purchase.  The extension goes until April 30.

The tax incentive gave people a reason to get out and make offers before it ended.  Now that there is time to breathe, home sales will more than likely drop over winter as buyers hibernate and then return in early spring.

The one worry is that people will become dependant on government support and will falter as soon as the tax credit is gone.  People are also worried about job losses pushing creditworthy homeowners into default.  So while home sales are increasing, it is still too soon to say we are back in a normal market. The Palm Springs real estate median sales price for September was unusually low and was posted at $70,500 versus $273,000 a year ago, down close to 75%. Palm Springs Foreclosure resales accounted for 40% of September's resale activity.