Existing home sales drop as boost from first-time-buyer credit wans

The effect of the government-sponsored surge in homes priced mostly under $250,000 is waning. 

By , Guest blogger

  • close
    Existing single-family home sales year over year percentage change since 2005.
    View Caption

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for January showing another significant crack in the epic government sponsored surge in home sales activity with single family home sales declining 6.93% since last month but still remaining 8.58% above the level seen last year.

As for prices, the January release showed a tepid 0.37% decline on a year-over-year basis as well as revisions to prior results erasing last month’s annual gain resulting in 39 consecutive year-over-year declines.

It’s important when reflecting on the sales results to consider that over 69% of all sales were for properties priced below $250,000 while just over 7% were priced at or above $500,000.

Recommended: Could you pass a US citizenship test?

Clearly, today’s results unequivocally indicate that the government’s tax gimmick drove a surge in "lemming" demand into the fall of 2009, bringing a renewal of speculative animal spirits, but with an effect that appears to have been largely temporary.

Realtor's are expecting a second great surge of "buying" activity as we near the second tax gimmick expiration this spring but as today's results suggest, these tricks are likely creating very little additional demand and simply shift demand forward as "buyers" jump for the government tax carrot... a carrot likely dangled over an abyss of asset price deflation.

The above chart (click here for full-screen dynamic version) shows national existing single family home sales since 2005.

Add/view comments on this post.

------------------------------

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

Share this story:

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...