Record jump for existing home sales

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    Home sales rose by a record 7 percent last month, in part because sellers have been cutting their asking prices for homes like this one in Manhasset, N.Y.
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Sales of existing US homes jumped last month by a record 7.2 percent over June's total, a strong sign that the housing market is finally getting back on its feet.

If July's totals hold for the rest of the year, sales in 2009 would top – just – last year's total of 4.91 million homes sold, according to the National Association of Realtors (NAR) in a report released Friday.

One of the big factors behind the market's recovery? The $8,000 tax credit for first-time home buyers.

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Sure, "cash for clunkers" gets all the attention. But the home buyer's tax credit is nearly twice as big and has been a major factor in the turnaround in sales, especially for homes at the low end of the market. Last month, first-time home buyers accounted for 30 percent of sales, the NAR said. It estimates that the tax credit will have brought 350,000 additional buyers into the market this year.

"A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales,” NAR economist Lawrence Yun said in a release. "The housing market has decisively turned for the better."

Also, like the "clunker" program, the housing credit is coming to an end. Buyers have to close on a home by Nov. 30 to qualify for the tax credit. Because it is taking longer to complete sales, the NAR recommends that first-time buyers make their offers by Sept. 30.

The national median price for homes sold in July was 15 percent lower than the price during the same month last year. Those price declines have lured in buyers even in some of the worst-hit real estate markets.
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