NAR reports fall in US home sales in May

| June 22, 2010 | 0 Comments
NAR reports fall in US home sales in May

The National Association of Realtors (NAR) has today revealed a surprise drop in sales of previously owned homes in the US for the month of May, despite the Government tax credit designed to entice homebuyers.

The industry body said sales fell 2.2% in May to an annual rate of 5.66 million units, up from a revised 5.79 million units in April.

However, the figure is up 19% on May 2009 levels.

Most analysts had expected sales to grow to 6.10 million units in the month as homebuyers rushed to complete contracts under the Government tax incentive program.

US home sales so far this year have been boosted by low mortgage rates and two tax credits: up to $8,000 for new buyers and $6,500 for current owners who buy and move into another home.

To qualify for the tax credit, borrowers had to have a signed offer by 30 April and the deal must be finalised by 30 June.

Consequently, some analysts expect home sales to dwindle after this month.

Meanwhile, commenting on May’s figures, Lawrence Yun, chief economist for the NAR, said the incentive would continue to boost sales next month.

“We are witnessing the ongoing effects of the home buyer tax credit, which we’ll also see in June real estate closings,” said Mr Yun.

“However, approximately 180,000 homebuyers who signed a contract in good faith to receive the tax credit may not be able to finalise by the end of June due to delays in the mortgage process, particularly for short sales,” added Mr Yun.

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