Tax credit helps boost Northeast home sales

November 24, 2009|J.W. Elphinstone, Associated Press

NEW YORK - Home sales in the Northeast soared in October as first-time buyers clamored to close deals before the expiration of a federal tax credit.

The nine-state region registered 85,000 home resales last month, up 25 percent from a year ago when the financial crisis gripped the country, the National Association of Realtors said yesterday. The median price, however, fell about 3 percent to $235,400.

With Manchester, N.H., and Boston leading the way with a drop of 26 percent and 23 percent, respectively, the number of unsold homes dropped in every Northeast city, but a recovery in home prices won’t be sustained until the supply of homes on the market falls further.

Manchester, N.H., recorded the worst price decline in the region. The median home price fell more than 12 percent to $202,000, but sales there jumped almost 17 percent year-over-year.

Nationally, sales of existing homes jumped almost 21 percent from October last year, without adjusting for seasonal factors. The median sales price tumbled 7 percent to $173,100.

The surge in sales came as many first-time home buyers rushed to qualify for an $8,000 tax credit that was scheduled to expire at the end of this month before Congress extended it through April.

“I’m busy like crazy,’’ said Nancy Philbrick, a real estate agent with Prudential Verani Realty in New Hampshire. “Prices are low, rates are low. I hope buyers remember that after the credit expires next year.’’

Buyers who have owned their current homes for at least five years are eligible for a tax credit of up to $6,500, while first-time home buyers - or anyone who hasn’t owned a home in the last three years - can still get up to $8,000.

“The only reason we’re seeing good numbers is because of government policies that are propping the market up,’’ said Patrick Newport, an economist with IHS Global Insight. “Housing is still fundamentally weak.’’

All nine major Northeast cities tracked in the Associated Press-Re/Max Monthly Housing Report showed annual increases in home sales last month. The report, also released yesterday, analyzed sales transactions in the metropolitan statistical areas recorded by all real estate agents, regardless of company affiliation.

Here are some highlights from the region:

■ Biggest sales gain: Trenton, N.J., saw sales climb by 45 percent from a year ago. Prices there continue to fall, tumbling 11 percent year-over-year to $231,500.

■ Smallest sales gain: Sales in the New York City suburbs increased 5 percent in October, while the median price lost 3 percent to $385,000.

■ Biggest price gain: For October, Pittsburgh prices inched up 2 percent from a year ago to $118,000, the only price increase in the region. Sales there rose almost 11 percent.