Following a great increase driven by the federal home buyer tax credit, pending home sales fell sharply after the tax credit expired, according to industry experts at the National Association of Realtors.
The Pending Home Sales Index dropped 30 percent based on contracts signed in May. It is believed the sharp drop is due to the expiration of the home buyer tax credit and a rush to sign contracts prior to the credit expiration.
The data reflects contracts and not closings, which normally occur approximately two months after contract signing. However, many closings have been delayed recently from a rush of buyers into the system and slow processing of short sales, in addition to the heavy volume.
Many mortgage lenders were hesitant to approve mortgages on homes needing flood insurance without congressional action. As a result, several home sales have been on hold until Congressional authorization was complete.
The article provided compliments of Paul Cristelli, New Jersey Re/Max Real Estate Agent; (973) 214-3316.
