The housing market is suffering more than expected following the expiration of the government’s $8,000 tax credit. Preliminary nationwide data indicates the decline began last month right after the credit was no longer available, with sales dropping more than 20 percent from May 2009, the New York Times reported. Builders have also been affected, as construction of new homes in May dropped 17.2 percent from April, according to the Department of Commerce. Mortgage applications were down by a third in May compared to last year, according to the Mortgage Bankers Association. Amidst this slump, buyers are reportedly becoming pickier, with more deals falling through and less contracts being signed. [NYT]

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While the debate over whether to buy or rent rages on in New York City, Coldwell Banker CEO Jim Gillespie says that now is the time to make a home purchase nationally. The real estate group recently conducted a survey outlining the reasons to buy a new pad, ranging from the federal allowances to market stability. Gillespie told ABC News that major incentives, including the first-time homebuyer tax credit and dramatically lower prices in some states, particularly in Florida, are making the housing market especially favorable for buyers.

September saw a 9.4 percent increase in existing home sales year-over-year nationwide to 5.57 million, the highest level in two years, according to data from the National Association of Realtors. Inventory decreased 7.5 percent to 3.63 million homes on the market. Meanwhile, the median price of a home dropped 8.5 percent from last September, to $174,900, the data show. Homes priced on the lower end continued to comprise the lion’s share of sales, with under-$100,000 home sales increasing 22.5 percent. For homes above $750,000, the number of sales was down year-over-year. First-time homebuyers had a strong showing in the sales market. The association’s annual survey of homebuyers found that first-time buyers, eligible for the first-time homebuyer tax credit, account for 45 percent of all buyers. “The homebuyer tax credit stimulus measure is having its intended impact of lifting sales, lowering inventory and lessening the price decline pressures,” said Lawrence Yun, chief economist at NAR, in his commentary on the association’s Web site. TRD

With new home inventory falling in many regions, U.S. home builders are reportedly scaling back incentive offers used to lure reluctant buyers. Meritage Homes, for example, is offering purchasers of $245,000 homes incentive packages valued at just 6 percent of the closing price — a far cry from the $60,000 incentive package the home builder offered at the beginning of the market slowdown. While some industry analysts caution that the end of the homebuyer tax credit could hinder recovery, Jeffrey Laverty, an analyst with research firm Oscar Gruss & Son, said that the scale back in home inventory is significant. In August, there was a national inventory of 261,000 homes, down from a 2005 peak of 570,000, according to Laverty, which could take some leverage away from buyers.

From the New York Web site: November 30 is just around the corner, when a first-time homebuyer must
close on the purchaser of a residence to qualify for the $8,000 tax
credit. The tax credit law requires the buyer to close on their
purchase, not just be under contract for a purchase of the residence. The tax credit is actually equal to 10 percent of the home’s purchase price up to a maximum credit of $8,000. First-time
homebuyers are eligible for the credit if they have not owned a
principal residence for three years prior to the purchase. The credit
phases out between $75,000 and $95,000 for singles and $150,000 to
$170,000 for married couples filing jointly. [more]

Palm Beach County real estate agents are echoing the rest of the
country in telling prospective buyers they should act now or miss the
$8,000 federal tax credit for first-time homebuyers. Jody Samanich
calls it free money when he pitches clients, and said many hesitant
purchasers are getting off the fence. The National Association of
Realtors reports sales of homes were up 7.2 percent in July and have
risen each of the last four months, the first such streak nationally
since June 2004. While there are intense lobbying efforts to extend the
subsidy for another 18 months, Pat Newport, an economist at IHS Global
Insight, said that while the tax credit is likely causing a rise in
sales, it’s affecting rentals and other aspects of the real estate
market. [more]

The $8,000 Obama administration homebuying tax incentive is playing a
major role in South Florida purchases. Data from consultancy Condo
Vultures and the Florida Association of Realtors show that 86 percent
of the 16,000 properties under contract in Miami-Dade, Broward and Palm
Beach counties as of July 27 sold for $350,000 or less. Buyers who
waited on the sidelines are now snapping up homes because they want to use the
program before it expires November 30. [more]

Florida wants to advance homebuyers the $8,000 federal tax credit now available to qualified buyers. But the Florida Homebuyer Opportunity Program lacks available funds and could derail a $161 million statewide grant program to help low-income home buyers and promote construction of affordable housing. Allocations to individual towns and cities will limit the number of loans that can take the advance payments, critics said. To find a local office for the Homebuyer Opportunity Program, go to www.floridahousing.org, select “Housing Partners,” then “Local Governments (SHIP),” then “Find Local SHIP Offices.” [more]

First-time home buyers in Florida and elsewhere can now borrow money against the Obama administration’s $8,000 tax credit to begin purchasing houses immediately. A group of Florida real estate professionals in March joined other industry members to lobby the government to allow the borrowing, and the effort is paying off, said Toni Pacelli-Hinkley, executive vice president of the Builder Association of South Florida. [more]