Overall pending home sales for November 2009 vs. November 2008 were up 15.5% according to the National Association of Realtors (NAR). Although pending home sales declined 16% in November 2009 compared to October 2009. The decline is contributed to first time home buyers rushing to complete their home buying transaction before the $8,000 first time home buyer credit was due to expire the end of November 2009.
Across the region, pending home sales fell as follows:
- Northeast -25.7% to 74.4. Up 14.7 % over November 2008
- Midwest -25.7% to 82.0. Up 9.2% over November 2008
- South -15.0% to 97.8. Up 14.7% over November 2008
- West -2.7% to 124.6. Up 21.4% over November 2008
Extension of First Time Home Buyers/Credit for Non-First Time Home Buyers
The government's extension of the first time home buyer credit and the additional credit of $6,500 to non-first time home buyers who have lived in the same home for five years should bring a substantial increase in home buying activity by Spring 2010 when the credit expires.
Under the new law, an eligible taxpayer must buy or enter into a binding contract to buy a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. The credit is now available to individuals earning up to $125,000, or $250,000 for couples, which has been increased from the previous earnings limit of $75,000 for individuals and $150,000 for couples.
For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return. Home owners do not have to sell their existing homes to benefit from the credit, but the new home must be their primary residence, and they must reside there.
The new $8,000 first time home buyer credit can be used towards the down payment of your home, but you will need to work with a lender that has a loan program that accommodates this or otherwise claim the credit on your 2009 or 2010 tax credit.
Homes that cost more than $800,000 are not eligible for the credit. The buyer must be over 18 years to receive the credit. You must stay in the home and use it as your primary residence for three years after the purchase or you will have to repay the credit. You cannot claim the credit if the home was acquired by gift or inheritance or you purchased the home from a related person.
The NAR expects that an additional 900,000 first-time buyers will qualify for the extended tax credit in addition to the approximate 2 million who have already purchased. 1.5 million repeat home buyers also are expected to take advantage of the credit. Even though home sale activity increases substantially prior to the school year starting, it is anticipated that home buyers will choose to buy homes earlier this year to receive the tax credits. Traditionally, increases in home sales occur prior to the beginning of the school year, but it is anticipated that many home buyers will purchase before the tax credits end.
Even though interest rates are climbing, job growth is anticipated in the second half of 2010 so hopefully this will help to stabilize the housing industry and maybe we will even see home prices rising in some areas of the country. So if you are thinking about buying a new home, now is a terrific time to take advantage of the affordable housing, abundant inventory, favorable interest rates and tax credits.
Source: http://www.realtor.org/press_room/news_releases/2010/01/pending_surge