It's the news everyone (well, mostly sellers) have been waiting for: An increase in home sales. And it happened during the week ending May 14, according to a weekly report from the Minneapolis Area Association of Realtors, when 958 buyers signed purchase agreements in the Twin Cities metro area.
Pending sales that week were 15 percent higher than the same period last year and the highest since the week ending May 8, 2010. It was only the second time that weekly pending sales rose since the federal home buyer's tax credit, which lured first-time buyer's with $8,000 in cash, expired at the end of April 2010.
But hold the applause. The increase happened only because sales after expiration of the home buyer's tax credit plummeted, falling 44 percent between the last week of April and the week ending May 14, 2010. This year, by comparison, sales between the last week of April and the week ended May 14 increased 4 percent.
I normally don't write about the weekly reports, but I'm noting this one because I want to prepare readers for what is going to be several months of what could be misleading sales reports. Here's why: The tax credit borrowed future demand, causing an unusually steep decline in closed and pending sales through the remainder of 2010. So for the next few months, be prepared for particularly large annual increases in pending sales, which will continue to be somewhat skewed.
The Realtors' group says that the week ending May 14 is a better measure of the post-tax-credit sales season than the first week of May because many of the contracts that were signed at the end of April didn't get recorded until the early part of May.