Market Recap

MARKET RECAP

Last week, we mentioned that the impending expiration of the first-time homebuyer’s credit was front-and-center on many people's minds. We also mentioned that we thought chances were good the credit would be extended. Our prognostication could be materializing... maybe.

Senate negotiators reached a tentative deal to not only extend the current credit but to add a few bells and whistles: namely, a new credit of up to $6,500 (with income limits). The new credit would be available to all homebuyers who resided in their current residence for a consecutive five-year period in the past eight years (effectively excluding real estate investors). But it's not a done deal yet; a few House members have balked at the added costs.

Many property experts have cited the credit as the principal reason for the housing recovery, though that recovery was somewhat undercut by the September new-home sales, which dropped 3.6% to a 402,000-unit annual pace, substantially lower than the median forecast for 440,000 units.

Still, homebuilders could find comfort in the news that home prices continue to rise while inventory continues to fall. On the former, the median price of a new house rose 2.5% to $204,800 in September. On the latter, inventory shrunk to 251,000 houses, the fewest since November 1982. Based on the latest data, it should take only 7.5 months to sell all homes at the current sales pace.

Prices continue to firm across the housing spectrum, according to the closely watched S&P/Case-Shiller home-price index, which climbed 1% in August after posting a 1.2% increase in July. September's posting is worth anticipating; given that last week's data from Altos Research had home prices declining in September (Case-Shiller's data were for August). With any luck, the Altos data was an aberration. www.movetonewburyport.com