As homebuyers rushed to beat the April 30th deadline to qualify for a federal tax credit, and as a result signed sales contracts to purchase homes hit their highest level since October 2009.
The National Association of Realtors reported yesterday that its seasonally adjusted index of signed sales agreements for previously occupied homes rose 6 percent in April which marked the third consecutive month of increases. Each of the three months was aided by the federal tax credits for first time homebuyers and returning home buyers.
Despite the fact that mortgage rates are at near record lows and that home prices still remain dramatically low, some potential buyers were likely not to act if they didn't have jobs or if they feared that their jobs were in jeopardy.
Paul Dales, U.S. economist with Capital Economics said, "Clearly, the race to meet the tax credit deadline has left the home-buying pipeline rather empty, and we fear that still high unemployment, heavy indebtedness and tight credit will mean that it stays that way."
Even though there has been evidence that the housing market is slowing, investors seemed pleased with the April rise in pending home sales. The Dow Jones industrial average rose more than 60 points in early trading yesterday and ended the day up 225.52 points.
Chief U.S. economist Ian Shepherdson at High Frequency Economics recently wrote that he expects "a gentle recovery once the plunge following the end of the tax credit is over."
According to the Internal Revenue Service about 2.6 million households had used the credit as of late April at a cost of $18.7 billion.
Sales in the West were up 7.5 percent in the West.
One new concern that has come to light recently is that many homes that were purchased in April included a large number of short-sales and with the amount of time it has been taking to close on a short-sale many Realtors and their clients are concerned that they will not be able to close escrow before the June 30th deadline. As a result, many are lobbing Congress to extend the deadline to help ensure these short-sales can close in order to allow the new homeowners to take advantage of the tax credit.