Sales of Existing U.S. Homes Probably Climbed on Tax Credit
Sales of existing U.S. homes probably climbed in September to the highest level in two years as buyers rushed to take advantage of a government tax credit before it runs out, economists said before a report today.
Purchases rose 4.9 percent, according to the median forecast of 76 economists surveyed. A gain would be the fifth in six months.
The $8,000 credit for first-time buyers, probably pulled sales and construction forward, signaling housing may cool in coming months. While Congress is considering extending the incentive and will be voting on it this week, factors such as lower prices and mortgage rates have also contributed to steadying a market that endured the worst slump since the Great Depression.
“Fears the tax credit will expire certainly would account for a certain amount of the run-up in the market,” said Ellen Zentner, a senior economist.
“Fundamentally, home sales have begun to pick up on their own outside of government help.”
Combined sales of existing and new homes reached an almost two-year high in July as asset purchases by the Federal Reserve helped drive mortgage rates to all-time lows. Record foreclosures also caused prices to tumble, making houses more affordable for Americans.
Builder Shares
Purchases of previously owned homes, which make up more than 90 percent of the market, are tabulated when sales close and therefore reflect contracts signed a month or two earlier. Sales of newly built residences, which make up the rest, are counted when a contract is signed, and may therefore cool months before the tax credit expires.
The Realtors’ group and the National Association of Home Builders are lobbying to extend the first-time homebuyers credit on concern demand will wane after it lapses. Lawmakers this week took up the call. |
Need All ‘Tools’
“The work of stabilizing the housing market won’t be done” when the credit expires next month, Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said during a panel hearing.
“We still need to use every tool at our disposal to fix this problem.”
Dodd and Republican Senator Johnny Isakson of Georgia, a former real estate agent, urged their colleagues to extend the credit through next June. They also proposed expanding it beyond first-time buyers to include all households up to an income cap of $300,000 for couples.
The Fed this week said its 12 district banks saw “stabilization or modest improvements” in many areas of the economy, led by housing and manufacturing.
“Most districts reported that housing market conditions improved in recent weeks, primarily from a pickup in sales of low- to middle- priced houses,” the Fed said in its Beige Book of economic conditions in September and early October.
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