February Existing Home Sales

The tax credits are coming!  The tax credits are coming!  Following two months of disappointing existing homes sales reports, The National Association of Realtors reported a third month of unsatisfactory news.  Perhaps the most concerning part about the report is the environment in which it is being reported.  Currently the government is offering a tax credit for virtually anybody buying a home for less than $800,000 who meets the program’s income requirements.  This program is an extension of last year’s program and is meant to reduce a less than salubrious supply.  A healthy economy has under a six month stock of existing homes.  After hitting 6.5 months in November, the supply has moved up for three months in a row and now stands at 8.6 months.  The additional inventory put pressure on the value of homes as the average price nationwide fell to $210,500 this month.  The Northeast was the only territory to see its average price increase year-over-year adding 7.5%.  The Midwest, South, and West lost 2%, 4.2%, and 9.8% respectively.  In order for prices and inventories to stabilize, the demand must have a reason to grow.  Since price has not sparked enough buying, the government is providing a tax credit.  With just over a month to go before expiration, the credits need to attract more buyers soon, or market forces may prove to be stronger than the government.  Here at Atlas we’ll bet on market forces over the government in the long run every time.