Three weeks after the federal government's generous tax credit for new home buyers ended, and the Twin Cities housing market is reacting the way many feared. Pending sales for the week ending May 15 were one-third lower they were at this time last year, as buyers who might have purchased in May decided to speed up the process and take advantage of the as much as $8,000 incentive that expired April 30.
Buyers signed 830 purchase agreements during the week ending May 15 compared with 1,235 a year ago, and 1,469 sales in the week the credit expired, the Minneapolis Area Association of Realtors announced Monday. For most weeks in March and April, pending sales stayed above the 1,000 mark.
Many real estate watchers had predicted that the tax credits weren't drawing additional buyers into the marketplace so much as they were pulling sales forward that would have taken place anyway.
Slump in new listings
New listings also experienced a nearly 20 percent drop that week -- 1,582 compared with 1,960 in the same week last year. Listings had risen by double digits in March and April, as anxious sellers scrambled to get their houses in front of tax-credit-motivated buyers.
"It remains to be seen whether the large drop in activity is a temporary post-credit blip or a harbinger of a longer-term demand 'cool down,' the Realtors' group said in its weekly market report.
The now-expired credits and low mortgage rates helped boost sales of previously occupied homes nationwide in April.
Sales of previously owned homes rose 7.6 percent to a seasonally adjusted annual rate of 5.77 million, the National Association of Realtors also reported Monday.
The increase sparked a rise in home prices. The median price for a new home rose to $173,100, up 4 percent from a year ago. In the Twin Cities metro, the median sales for April was $169,800, an 11 percent increase from a year ago, mainly due to fewer foreclosures in the marketplace.
The Associated Press contributed to this report. Kara McGuire • 612-673-7293