Home resales surged in July

Home resales in July posted the largest monthly increase in at least 10 years as first-time buyers rushed to take advantage of a tax credit that expires Nov. 30.

Sales jumped 7.2 percent nationally and beat expectations, the National Association of Realtors said yesterday. "It is encouraging news," said Laura Lafayette, the chief executive officer of the Richmond Association of Realtors. "In the Richmond metro area, we were slower to see the dip in sales, so we are coming out of the trough later than some other markets. But we do seem to be headed in the right direction in the Richmond area."

The U.S. home-sales figure was the fourth-straight monthly increase and the strongest month since August 2007. Sales hit a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June. Sales had been expected to rise to an annual pace of 5 million, according to economists surveyed by Thomson Reuters.

The risks to that healthy pace, however, are job cuts, mortgage rates and the looming end to the homebuyer tax credit. And the last one could be a doozy because first-time buyers are snapping up one out of every three homes.

First-time buyers get a credit of 10 percent of the purchase price of a home, up to $8,000. The credit phases out for singles earning more than $75,000 and couples earning more than $150,000. The real estate industry is lobbying to have the credit extended, but it's unclear whether Congress will be swayed.

The majority of sales transactions so far this year in the Richmond region have been those homes selling under $300,000, Lafayette said. Most appear to be first-time homebuyers.
"We need to see housing selling for over $300,000 as well as homes [selling for] under $300,000," she said. "When we see that, we know that we are definitely in a significant recovery mode. We are headed in the right direction. This will be a slow, steady climb. It not going to be a steep trajectory upward."

The results for the region and for Virginia are issued on a quarterly basis, not monthly.

Sales of foreclosures and other distressed properties made up about one-third of all transactions last month, down from nearly half earlier this year. Those sales helped drag down the national median sales price by 15 percent to $178,400.

Source: Richmond Times Dispatch
Published: August 22, 2009
Deputy Business Editor Gregory J. Gilligan contributed to this report.