You can’t blame snow for what happened to Washington-area sales in May. I’m sure you remember the way snow put a damper on real estate (and most everything else) in February. Sales of existing homes dropped 5 percent from January to February.
That’s nothing compared to what happened from April to May, when area sales fell 42 percent.
How in the world could this happen?
Well, it wasn’t a total surprise. The federal tax credit that gave $6,500 or $8,000 to move-up and first-time home buyers had stimulated a lot of buyer activity. The credit expired on April 30, causing sales to drop sharply in May.
Sales had been very strong in March and April, exceeding last year by 22 percent in March and 26 percent in April. But many of those buyers found their home and signed a contract during those two busy months.
There just weren’t as many buyers last month, so May’s sales were 26 percent lower than in May 2009.
Does this mean the rest of 2010 is doomed? Not doomed, for sure, but it will be a more sedate market than we’ve seen in recent months. Don’t forget that the spring is always the busiest portion of the year for real estate, so sales were going to be slow in the summer and fall anyway.
Still, if interest rates remain affordable, our relatively healthy local economy could keep home shoppers out there at last year’s pace during the rest of 2010.
Another thing to remember is that April may have “stolen” some sales that otherwise would have occurred in May and June. Now that the tax credit is behind us, we can expect to see folks buying and selling in the coming months for all the typical reasons: job and school changes, growing and shrinking households, and move-up buyers looking for more space.
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