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There is already a thread on this but I will post again. New home sales only account for about for about 5% of total home sales.
Existing home sales were down 2.2% from April 2010 (5.79 million units) to May 2010 (5.66 million units) but were up 19.2% above May 2009 (4.75 million units).
A 2.2% decrease in May when people were pushing to get closed by April 30th is not a huge decrease. You need to wait and see what the next few months hold to be able to say what the affect was.
I have been watching the market in Central NJ (08820 zip) since early 2009. Once the tax credit was enacted in first quarter of 2009, a lot of houses went under contracts very quickly.
Now it's been almost 2 months that tax credit expired. I saw only 2 went under contract since May 1st. Those 2 houses were priced very nice.
Now the inventory is slowly building and I am getting "priced reduced" email listing almost everyday.
Is that double dip that a lot of people are talking about? I guess so but again who knows for sure!!!
It makes sense that NEW HOME sales would decline because of the tax credit. With a resale you are pretty sure that you can close the loan by June 30 (I know there have been exceptions). However, with a home that is still being built it is very unlikely that you could sign a contract in April and be closed by June.
In my area there is very little spec building going on so the home build would have to go from design to permit to built only 2 months. That is highly unlikely. So although the tax credit spurred activity in home sales, it spurred EXISTING home sales, not new home sales.
Plus-in many areas you simply cannot build as cheap as you can buy, even if the existing home needs a few repairs.
I would think the real answer will be 3-6 months from now if sales continue to decline. It makes complete sense that at least a few months of sales got pushed up because of the deadline. Another words those that planned on buying pushed it up to get the credit. There are also those that believe that pushed up prices and now is a better time to buy price wise.
I don't see how it does NOT double dip... Everything is propped up by debt. It's borderline frightening.
In the short term I don't see why the downsizers can't continue to feed the lower price points, though. So it's more then feasible that things could bounce around for a while as the market looks to find a bottom. There will likely be plenty of opportunity to use statistics to tell either side of the story.
Eventually, though - the bill needs to actually get paid. Moving the debt around can only work for so long.
There is already a thread on this but I will post again. New home sales only account for about for about 5% of total home sales.
Existing home sales were down 2.2% from April 2010 (5.79 million units) to May 2010 (5.66 million units) but were up 19.2% above May 2009 (4.75 million units).
A 2.2% decrease in May when people were pushing to get closed by April 30th is not a huge decrease. You need to wait and see what the next few months hold to be able to say what the affect was.
New house sales are counted when the contract is signed. Used house sales are counted when the house closes. This means there's a 1-2 month lag between the two numbers. In other words, your May used house sales happened at the same time as mini-boom in the March and April new house sales.
Wait until the July used house sales numbers to see the full effect of the housing welfare ending. That will be the data that includes a full month of contracts that closed without the buyers being paid to buy the house.
New house sales are counted when the contract is signed. Used house sales are counted when the house closes. This means there's a 1-2 month lag between the two numbers. In other words, your May used house sales happened at the same time as mini-boom in the March and April new house sales.
Wait until the July used house sales numbers to see the full effect of the housing welfare ending. That will be the data that includes a full month of contracts that closed without the buyers being paid to buy the house.
Quote:
Originally Posted by Mike Peterson
If the new home sales are for contracts signed and not closed then this has really nothing at all to do with tax credit unless you are assuming they will be able to get the home built and closed in 2 months.
Bottom line is this thread was premature since as you have stated we will have to wait a few months to see what the affect is. Especially since as I have stated new home sales are are very small percentage of overall sales.
Filler
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