Despite 2.7% Monthly Dip, Home Sales Remain Up from 2008: NAR
August home sales weakened after strong gains in July but still hold above volume from a year ago, according the National Association of Realtors (NAR). Existing home sales slowed from the previous month by 2.7% to a seasonally adjusted rate of 5.1m units in August. Sales increased, however, by 3.4% from August 2008. In the last four months sales have increased 15.2%. The total housing inventory fell in August by 10.8% to 3.62m homes for sale. That total represents a 8.5-month supply based on the current sales pace, an estimation that dropped from a 9.3-month supply in July, according to NAR. The national median existing home price dropped 12.5% from last year to $177,700, according NAR. The continued growth is due in large part to the first-time homebuyer tax credit, said Lawrence Yun, NAR chief economist. The credit, which gives qualifying buyers up to $8,000 in tax refunds, is estimated by a recent Campbell Communications survey to have added 357,000 additional home sales so far in 2009. "Home sales retrenched from a very strong improvement in July but continue to be much higher than before the stimulus. The first-time buyer tax credit is having the intended impact of bringing buyers into the market, allowing them to take advantage of very favorable affordability conditions," Yun said. First-time homebuyers purchased 30% of homes in August, and distressed purchases made up 31% of transactions, the same totals as July, according to a survey from NAR. "The recent trend shows broad improvement in most of the country, but with an expected rise in foreclosures over the next 12 months we need to maintain a healthy level of ready buyers to absorb the inventory,” Yun said. “An extension of the tax credit is critical to preserve incentives for financially qualified buyers to enter the market.” Last week, the US Senate introduced a bill to extend the tax credit by six months after the November 30 expiration date. Write to Jon Prior.