Existing Homes Sales Jump in Reaction to Tax Credit

Single-family existing home sales jumped 7.4% in April following a similar rise in March as buyers rushed to meet the deadline for a federal homebuyer tax credit. The National Association of Realtors expected the increase, noting that the tax credit required borrowers to sign a sales contract by April 30 and close June 30. NAR chief economist Lawrence Yun is forecasting that sales will be elevated in May and June with "some temporary fallback" in the following months. The Realtors reported that sales of previously owned single-family homes rose to a seasonally adjusted annual rate of 5.05 million in April from a 4.7 million rate in March. The April report shows more sellers are putting their homes on the market to take advantage of the stabilization in home prices and low mortgage rates. NAR also reported that the inventory of unsold homes rose by 390,000 units in April to 3.43 million, an 8.2-month supply at the current sales pace. A NAR spokesman said two-thirds of that increase is normal for this time of year. The last time the inventory was above 3.4 million was in November 2008. Weiss Research analyst Mike Larson said the rise in inventories casts a "pall over the recent improvement in supply trends." He also noted that purchase mortgage applications have "slumped to multiyear lows."