March 2010 Surge in Home Sales

This article from the National Association of Realtors® appeared this morning in RISMedia, echoing data that has also been reported elsewhere in recent weeks:

Pending Home Sales on an Upswing

Of course this is good news!  In addition to an increase in March in the number of homes sold and closed, the number of pending contracts is up, which should bode well for April and May closings. However, I’m not sure that I am ready to endorse the thesis at the beginning of the article: “Pending home sales increased again in March 2010, affirming that a surge of home sales is unfolding for the spring home buying season ….”

The RISMedia piece acknowledges the role that homebuyer tax credits may have played in helping March sales and contracts. NAR’s chief economist offered what I believe is a realistic forecast: “Clearly the home buyer tax credit has helped stabilize the market. In the months immediately following the expiration of the tax credit, we expect measurably lower sales,” he said. “Later in the second half of the year, and into 2011, home sales will likely become self-sustaining if the economy can add jobs at a respectable pace, and from a return of buyer demand as they see home values stabilizing.”

What we don’t know is how much of this surge signals real growth and the beginning of a return to more “normal” market conditions, and how much of what would have been April, May, and June contracts have already happened. Probably, it’s some of both.

In the Austin/Central Texas area, the change in home sales from February to March 2010 was 56.7% — almost twice the average change for the same time in each of the previous ten years. In a typical year we would expect steady growth in unit sales in April, May, and June as well.  Time will tell ….

If the first five days of May are any indication, I will be busy over the next few months, but the Central Texas market has remained stronger than many areas throughout this downturn. Obviously, we’re all going through real estate market conditions that most of us haven’t experienced before, with the possible exception of 1989-1990.  I want to believe that we’re emerging into more typical conditions, and I hope there are no more tax incentives to distort the market and to cause this uncertainty to continue.