Homebuying Season Could Extend into the Fall

Posted by: Prashant Gopal on September 11, 2009

The spring buying season was a little longer than usual this year. Home sales gathered strength as the summer progressed. Pending home sales, for example, jumped 3.2% in July from the previous month (the sixth-straight monthly increase) and rose 12% from July 2008.

The $8,000 first-time homebuyer credit, which is due to expire after Nov. 30, is likely driving sales and could continue to do so into the fall. Sales typically slow before schools open in the fall. But there’s nothing like a fast-approaching deadline to motivate (Think tax day). A buyer must close on a house by the end of November to take advantage of the program. Many last-minute shoppers are likely to be rushing, during the coming weeks, to sign purchase contracts.

And sellers also will be eager to make deals before the credit ends. Data released today by real estate site Trulia suggests that, in many lower-cost cities, the share of listings with at least one price reduction increased steadily from June through August. In Omaha, for example, 23% of homes on the market had at least one price cut. By August, 27% of listing prices were cut. Kansas City, Colorado Springs, Atlanta, Indianapolis, Memphis, Milwaukee, and Raleigh also showed a similar pattern.

What I’m wondering is whether sales will continue to rise as the Nov. 30 deadline approaches and then drop like a stone. Or does the housing market have enough momentum to recover on its own? (I argued in last week’s issue of BusinessWeek that the housing market is stronger than many believe).

Congress also could act to extend or even expand the credit. Johnny Isakson, a Republican Senator from Georgia and a former real estate broker, is behind a plan for a $15,000 tax credit that would be offered to any buyer, not just a first-time buyer. Isakson’s bill would make the credit available for another year.

Reader Comments

Rick Arvielo

September 11, 2009 2:16 PM

gabe, san diego

September 11, 2009 4:28 PM

God bless the Republicans! yes, we need another extension, yes we need $15k. Barrack Hussein Obama, you bailed out the street (big companies), its time to bail out the main street!

art

September 11, 2009 5:57 PM

Gabe,

As far as I know George Bush bailed out Wall Street. It all took place in fall 2008 when he was still the president. So, what are you talking about really ?

Hunter

September 11, 2009 7:21 PM

Please extend! Republican or Democrat, I don't care. I'm in the market right now due to relocation, and I hate rushing to buy a house. Not the kind of impulse-buy you want to jump into without the time to make sure all the bases are covered, but I also can't just pass up the tax credit. If they don't extend, they'll probably see a drop as people stay put, especially going into holidays.

az_lender

September 11, 2009 10:05 PM

Of course Congress will extend or expand the credit. All this "urgency" and "deadline" stuff is just a way to encourage the knife-catchers. Since you are not an idiot (Mr. Gopal), you must be a shill for the NAR.

a concerned citizen

September 12, 2009 11:38 PM

Didn't George W Bush deregulated the financial markets? His goal was for Americans to own a home and not rent. Looking back, at what cost? Is this why we had risky lending practices just to get ANY BODY in a home even without a strict credit/financial check?

lucky

September 13, 2009 11:31 AM

People who can afford buying house now should buy now.In couple of years this may go back to the 06 highs.

Citizen

September 15, 2009 1:35 AM

I think large corporations should be given more government money so they can buy up all the real estate and just have everyone rent from them. Everybody knows big business takes care of people but the government trys to hurt people. So rather than give tax credits to individuals who are not really wise enough to know what to do with them, just give the money to corporations and give them a chance to help people like they always do. This seems to be the most fair thing to me. It will create wealth for all.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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