On the cusp of Christmas, Santa's real estate bag offers goodies and some lumps of coal.
First, the good news: First-time buyers taking advantage of the government's tax-credit incentive helped yank sales of previously owned homes up by 7.4% in November from October, according to the National Association of Realtors, a trade association. Sales are up 44.1% from a year ago, with about half of them generated by first-time buyers.
The median price of an existing home barely inched up from last month to $172,600, and was down 4.3% from the year before. Compared with the downward spiral of the past couple of years, that is good news indeed.
Lawrence Yun, chief economist for NAR, said the increase was expected.
"This clearly is a rush of first-time buyers not wanting to miss out on the tax credit. There are many more potential buyers who can enter the market in the months ahead," Yun said.
That's because the tax credit program, which offers up to $8,000 for first-time buyers and was supposed to expire Nov. 30, has been extended through April 30. The extension includes incentives of as much as $6,500 for some buyers who already own a home.
Add to that near-historic low interest rates -- late last week the average rate for a 30-year fixed-rate mortgage was 4.94%, according to Freddie Mac -- and you get an upbeat year-end housing report.
The sugar on top --- the supply of existing homes dropped 1.3% to 3.52 million units, according to NAR, or a 6 1/2-month supply at the current sales pace.
Now the not-so-good news: New-home sales plummeted in November to the lowest level since April. The 11% plunge from October's pace may indicate that home buyers are taking a deep breath now that the tax credit program has been extended.
Also, prices have been more favorable for previously occupied homes, especially foreclosures, so new homes are having to sit in the corner, like a rejected suitor. Overall sales for the first quarter of 2010 are expected to drop, as the first wave of new-home buyers levels off, economists say.
Bottom line: You takes the good news with the bad, like a chocolate cake with the fruit cake.
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