A drop in existing home sales – The situation is not normal yet!
Industry watchers were surprised by the fact that there was an unexpected fall of sales of existing homes in the month of January. For those who thought the housing market was back in business, this news has come as a setback.
An increase in sales was expected
Looking at the support infused by the federal government into the market and the banks doing all they could to prop up sales, an increase in homes sales was expected. The fact that the salaries were also up, contributed to this belief. But, all positive estimation fell by the wayside as the sales rate in January was one of the lowest since the time recovery started taking place in the housing market.
Reasons for the drop
There can be many reasons for the drop, but experts believe that the primary reason for a drop in the home sales is the time taken between shopping for a home and closing the deal. There was quite a big delay between the two processes. Such home buyers wanted to take the advantage of the popular tax credit. This homebuyer tax credit was extended in the month of November, and this is when people got into the market. This has meant that contracts are just being offered and the sales will close after a few months.
Activity might be picking up
Owing to the aforementioned facts, there is a good chance that home sales activity will be picking up in the near future. Buyers are slowly but surely taking advantage of the tax credit, but the process takes time. Industry watchers estimate that there will be a shift in figures for the better. The deadline for tax credit is looming, so people who want to take advantage of tax credit will do so now.
Across the board sufferings
It isn’t that there were some types of real estate that suffered, while the sales for some properties went up. Housing market went down, Period. There was an across the board drop in the sales of single family homes and even condominiums. The drop in sales was also across regions, where the Northeast suffered heavily while the West fared marginally better.
When it comes to real estate prices, a further decrease is still on the cards, even though the market might be just about lurching forward. Experts believe that the situation will continue in this fashion for the next few years.
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