April existing home sales increased to their highest level since November when the 2009 version of the first time home buyer tax credit was due to expire. The increase in sales and inventory for-sale indicates the extended and expanded version is working as more households buy homes and more existing home owners put their home on the market. The single family inventory is the highest it has been since late 2008 and even with the increase in sales rate, the month’s supply rose to 8.2 months.
The increase in sales spread to all regions except the West where single family home sales declined 6% and condo/coop sales declined 8.3%. I suspect the decline in the West was postponed purchases in California. California buyers could qualify for a federal tax credit if they signed a contract by the April 30 and they could qualify for a $10,000 California state tax credit if they purchased on or after May 1. The double reward would be sufficient to postpone closing to May.
Existing single family home prices rose on a year-over-year basis for the first time since mid-2006. NAR also reports that almost half of the sales were to first time home buyers. Since first time home buyers have been more responsive to the tax credits and since they purchase more modest home, the increase is more likely to be real house price increases than compositional changes from a different set of homes sold.
New home sales contract signings for April will be reported later this week and should show similar increases since April was the last month that a buyer could qualify for the credit by signing a contract to purchase a new home.