Pending home sales slow since tax credit expiration

This past week our listings saw an average of 1.7 showings each which is huge improvement over last week’s report.   I think it is safe to say that the slow traffic from two weeks ago was due to the Memorial Day holiday.   Showings have most certainly picked up since then.

There is no doubt that since the expiration of the tax credit, real estate activity has slowed down a good deal.   As with anything, there are always peaks and valleys.   The end of April was a peak for contract activity since the tax credits expired on April 30 and, as we should have expected, we are now experiencing a valley.   I’m optimistic that activity will level out again soon.

We published our monthly E-newsletter this past week and included were the real estate market stats for Mecklenburg county.   Here’s a quick summary of the details when comparing this past May with the same period one year ago:

Home sales are up 54%

Average sales price is up 4.7%

Average time on market is down 1.9%

Pending home sales are up 5.25%

Housing supply is down 7.6%

Mortgage rates have remained steady

In comparison to last year, the numbers look terrific.   However, keep in mind that we are comparing a market that is in recovery (today) to a market where no one knew if a bottom would ever come (last year).   So its not surprising that this year’s data looks good.   I am very pleased to see that time on market and housing supply have both  finally started to retreat.   Those two indicators are definitely a first step towards rising prices.

Year over year, the numbers look good.   When we look at the numbers from April 2010 to May 2010, however, we get  a slightly different story.   Overall, the market is fairly consistent between these periods except in pending home sales.   In April, the pending home sales were at 2243 and then dropped to 1763 a month later.   This represents over a 20% drop in one month.

This change is clearly due to a surge in pending home sales right before the expiration of the tax credit (a peak) and now the contracts are coming in a lot slower than the old ones are closing.   My hope is that this is temporary and that we’ll see a steady increase again towards the end of the summer.

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