The New York Times reports that even though analysts expected U.S. home sales to remain flat, there was an 8.2% increase from January to February suggesting that many homebuyers were taking advantage of the tax credit. Surprisingly, even in areas recently hit by storms the number of home sales rose in February.
Lawrence Yun, chief economist for the association, said the report “may signal the early stages of a second surge of home sales.”
“We need a second surge to meaningfully draw down inventory and definitively stabilize home values,” Mr. Yun said in a statement.
The large supply of foreclosed homes on the market at low prices have added to the appeal of some homeowners who may not have considered purchasing a new home.
This surprise increase in home sales provides refreshingly good news in the wake of a housing market that has been lying in a rut for several months and an increase in foreclosures.
“I don’t think we’re in for a further slump, but I think the recovery is going to be slow and painful,” said Michael Carliner, a visiting fellow at Harvard’s Joint Center for Housing Studies. “The risk that the bottom is going to come even further out of the market is easing.”
While there are now signs slowly emerging that suggest the housing market and the economy are on a gradual road to recovery, analysts agree that it is unclear exactly when we should be able to see a strong turnaround as there are so many varying factors involved.
With the tax credit set to expire on April 30, 2010 without plans of extension, it will be interesting to see how home sales fair in May and June of this year. Most economists believe that home sales will rise gradually, slowly picking up and move firmly higher in 2011.
If you’re considering using the first-time homebuyer tax credit, now is the time to get the ball rolling, and fast.
