Nov. 23, 2009 – 9:55 a.m. CT

First-time Buyer Credit Boosts Home Sales

Existing home sales surged more than 10% in October and a record-breaking 23% from a year ago. This marks a sharp contrast to the collapse in home construction for the month, and shows the influence that the first-time buyer tax credit is having on demand.

The tax credit, which was slated to expire for homes that do not close prior to
December 1, 2009, was recently extended. Today's sales, however, reflect the pre-extension push to get in under the wire.

Sales are expected to remain robust in November as the remainder of the pre-extension sales work their way through the system. We are likely to see sales slow – and perhaps even dip into the negative – for a month, once those earlier sales play out. The extension of first-time buyer credits into 2010, however, should help put a floor on near-term losses.

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