Home Sales Moving Forward

Home sales were better than expected in April according to home sales numbers released, showing a gain of 7.6 percent for a seasonally adjusted annual rate of 5.77 million, better than the 5.63 million economists had been expecting. This boost was clearly due to the tax credit offered (and now expired for everyone but armed forces, intelligence and foreign service members) earlier this year.

This number suggests our market is recovering, however this figure is riddled with innuendos... the tax credit incentive, for example suggests this figure is bloated and will fall sharply now that the tax credit has expired. In addition mortgage applications to purchase homes fell sharply to the lowest level seen in 13 years. Add the foreclosure inventory to this equation, consider the defaults currently playing out and it is clear this figure is not as strong as we would all like. In fact the current estimated time it takes to move inventory 8.4 months.

Interest rates are the saving grace right now, but with California unemployment around 12 percent, finding home buyers is becoming a harder and harder feat.

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The title of this article was home sales moving forward.... now that we are on the same page, share your thoughts on the real estate market.

My thoughts specifically are rates despite being very low right now, will be rising soon, probably after the mid term elections. When rates do start to rise, the potential for substantial increases is serious. Inflation will inevitably set in leading to sell offs and high offered rates. Due to the nature of the problem these increases could be substantial. When considering this in light of inventory, which I anticipate will not subside anytime soon and future home sales may remain subdued moving forward.