WASHINGTON (AP) Home sales surpassed expectations for April as government incentives provided a temporary boost to the housing market.
The National Association of Realtors said sales of previously owned homes rose 7.6 percent to a seasonally adjusted annual rate of 5.77 million. That was the best showing in five months and better than the 5.63 million units economists had expected.
The federal government provided a big boost to home sales this spring by offering first-time buyers a tax credit of 10 percent of the purchase price, up to $8,000. There’s also a credit of 10 percent, up to a maximum of $6,500, for homeowners who want to upgrade.
The deadline to get a signed sales contract and still qualify for either credit was April 30. Buyers have until the end of June to complete their sales.
The tax credit’s impact is likely to show up in the home sales report for several months because it measures completed sales rather than sales contracts.
But the fate of the housing market for the rest of the year is uncertain. Without the tax credit, mortgage applications to purchase homes fell to the lowest level in 13 years last week, according to the Mortgage Bankers Association.
If sales don’t pick up, prices could slump as well, especially as more foreclosed homes hit the market.
Real estate agents said there is enough demand to keep the market chugging. Prices have fallen dramatically since the boom years — as much as 50 percent in some places.
“The tax credit was a nice incentive. Maybe it pushed people off the fence, but also the key driver of their thinking is affordability,” said Dominick Prevete, regional vice president for the northern New Jersey market at Weichert Realtors.
The first-time buyer’s credit spurred far more sales than the one for current homeowners, real estate agents said. That’s partly because many homeowners have seen the value of their properties sink dramatically and are reluctant to sell.
Also, a shaky economy and uncertain job prospects are making many consumers more cautious about moving to larger homes.