WASHINGTON - Existing home sales increased at a 6.8% annual rate to 5.35 million in March, above economists’ estimates as the homebuyers’ tax credit is set to expire, the National Association of Realtors reported today.
The March total for existing home sales was the largest since December and was the first increase in four months.
Economists estimated 5.280 million existing home sales in March, according to the median estimate from Thomson Reuters.
Lawrence Yun, the NAR’s chief economist, said the homebuyer tax credit has preserved $1 trillion of household wealth by preventing home values from declining further amid the recession.
To qualify for the homebuyer tax credit, buyers need to sign a contract by the end of April and close on the sale by the end of June.
The tax credit has “generated enough momentum” to revive buyers’ confidence going into the second half of 2010, Yun said. Mortgages are likely to be more accessible to buyers, Yun said, as banks’ capital levels recover.
“The April expiration of homebuyer tax credits will likely pull forward housing activity in the near term, but set up a complementary decline in the months that follow,” John Lonski, chief economist for Moody’s Capital Markets Group, said in a research note Monday.
Sales in February were revised to 5.01 million from 5.02 million reported last month.
The median home price increased to $170,700 in March from $164,600 in February. The median price increased 0.4% from March 2009. Home prices “have stabilized” in the first quarter, Yun said.
The inventory of existing home sales decreased to 8.0 months from 8.5 months in February. Inventories “are moving in the right direction, but are not back to normal,” Yun said.
New home sales data for March will be released by the Commerce Department on Friday.
