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WASHINGTON — Racing to complete their purchases before a tax credit for first-time owners expires, home buyers pushed sales up last month by the largest amount in more than 26 years.
After jumping 9.4 percent in September, home resales are up nearly 24 percent from the bottom in January, the National Association of Realtors said Friday. But the housing market’s momentum could easily peter out if Congress doesn’t extend the credit of up to $8,000 for first-time buyers beyond its Nov. 30 deadline.Nationwide sales rose to a seasonally adjusted annual rate of 5.57 million last month, from a downwardly revised pace of 5.1 million in August. That was the highly monthly sales rate in two years and beat economists’ forecast of 5.35 million, according to Thomson Reuters. Sales, however, are still down 23 percent from their peak four years ago.In another positive sign, the inventory of unsold homes on the market fell almost 8 percent to 3.6 million. That’s less than an eight-month supply at the current sales pace, and the lowest level since March 2007.Still, economists caution that the pain from the worst housing bust since the Great Depression probably isn’t over yet.Though home sales and housing construction have risen steadily after hitting bottom this year, most economists believe that prices, which recently stabilized, will resume their descent. The median sales price last month was $174,900, down almost 9 percent from $191,200 a year earlier, and slightly lower than August’s median of $177,300.In Dallas/Fort Worth, the median home sales price was $144,500, up 1 percent from a year ago.To entice more buyers, Sens. Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., want to extend the tax credit through June 30 and expand it to include all home buyers at an estimated cost of $16.7 billion.Real estate agents and home builders are loudly in favor, arguing that the tax credit is crucial to get the housing market back on its feet.However, some analysts say the tax credit may not be as important to the housing market as real estate agents suggest. The Realtors association has "an incentive to talk up the effects of the credit as it is urging Congress to extend it, and it therefore may be exaggerating the credit’s effects," wrote Nomura Securities economist Zach Pandl.One potential roadblock to an extension also emerged this week.There are concerns that some of the 1.5 million applications for the tax credit are fraudulent. The Treasury Department’s inspector general for taxes questioned the legitimacy of some 100,000 claims for the credit, potentially including some illegal immigrants and 580 people under 18.
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