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Waiting for houses to go

By Holden Lewis · Bankrate.com
Thursday, April 22, 2010
Posted: 11 am ET

Home resales rebounded in March, and more homes were put on the market than were taken off.

Resales rose to a seasonally adjusted annual rate of 5.35 million units, according to the National Association of Realtors. That's a little higher than February's annual sales pace of 5.01 million units. March existing home resales were pretty much in line with the consensus estimate of around 5.3 million.

When you take out the seasonal adjustments, 427,000 homes were sold in March, compared to 300,000 in February. The inventory -- the number of homes for sale -- rose to 3,584,000 units in March, compared to 3,531,000 homes in February.

Median and average prices for home resales were up an insignificant amount from March 2009. The median price in March was $170,700; half of homes sold for prices higher than that. The median in March 2009 was $700 less. The average home price was $215,400, up from $211,400 a year earlier.

The Realtors' economist, Lawrence Yun, tries to spin these numbers positively. He calls the homebuyer tax credits "a resounding success." He might be right; we don't know what would have happened to sales without the tax credit. But "resounding success" is probably an overstatement. The inventory of almost 3.6 million homes doesn't include houses that are delinquent but not yet in foreclosure, and it doesn't include the homes of people who are in trial loan modifications and who eventually will flunk out.

The NAR conducts a separate survey that found that first-time buyers bought 44 percent of homes in March, and 37 percent of sales were to repeat buyers. The other 19 percent of sales were to investors, most of whom intend to be landlords. When the percentage of investors goes up, we'll be on our way to a firmer housing recovery because it will be a sign that rents are rising and new households are forming. That won't happen until unemployment declines and wages rise. Vladimir and Estragon have a shorter wait.

Not everyone is as pessimistic as I. "After a three-month slide, existing home sales staged a comeback in March," said Bob Walters, chief economist for Quicken Loans. "Buoyed by the unseasonably warm weather, homeowners were out en masse scooping up bargain-priced real estate. Adding to the increase in sales is the looming deadline of the government's first-time homebuyer tax credit, which is set to expire at the end of this month."

Calculated Risk predicts that the homebuyer tax credits should contribute to home sales in the next two monthly reports, too.

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