The sales of newly-built homes soared in March. Even more than what was expected. But the news may not be as glowing as what the media is telling us.
Take a look at the headlines from last Friday:
- Sales of new homes rocketed up 27 percent in March (WaPo)
- New-home sales rise fastest in 47 years (CNNMoney)
- Sales of New Homes Climb by Most Since 1963 (Business Week)
None of these statements is false, per se, but each is somewhat misleading. The biggest reason why March’s New Home Sales was even able to rise 27 percent is because data from the month before it — February — was the worst in New Home Sales history.
In February, new homes sold posted its lowest level in recorded history.
A better comparison would be against March a year earlier; or October 2009, the month before the home buyer tax credit’s initial expiration date.
Against both of those time periods, March 2010 fared well.
Home buyers – first-timers and repeats alike — went under contract last month, taking advantage of the soon-to-expire federal home buyer tax credit program. The credit gives up to $8,000 for first-time buyers and up to $6,500 for repeat ones.
Buyers must be in mutual contract on or before April 30, 2010 to be eligible for the credit, and must closed on or before June 30, 2010.
The New Home Sales data included other strong housing data, too. The current supply of new homes nationwide is at a multi-year low. Along with stronger home demand, this should push Chicago home prices higher throughout the coming months.
It’s no wonder builders are bullish on the economy.
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The federal home buyer tax credit expires April 30 and the deadline is sparking a home sale surge. It figures to burden real estate, mortgage and title offices nationwide over the next 60 days so plan your closing date accordingly.
Especially because the last Friday in May is the Friday before Memorial Day.
Now, if the connection between the tax credit and Memorial Day is not immediately clear, think of your own office on a 3-day weekend’s Friday. Some of your colleagues take a half-day at work, others take the entire day off.
Office-wide, productivity drops.
The same is true in the real estate space. Offices are short-handed ahead of a holiday so, if you’re under contract for a home and plan to close in May, consider a closing date other than Friday May 28, 2010.
And meanwhile, with 6 weeks until Memorial Day, here’s some steps you can take today prepare for other people’s time off later.
- Notify your lender of your planned vacation time between now and your scheduled closing
- Purchase a homeowners insurance policy and prepay the first year. Send proof of payment to your lender.
- Have Power of Attorney forms lender-approved and signed by all parties in advance, if applicable
- Deposit gift monies and/or retirement fund withdrawals into an acceptable bank account, if applicable
- Schedule your final walk-through as far in advance as is realistic so there’s time to make “fixes”, if needed
- Have your closing funds ready at least 1 day in advance
The tax credit’s expiration is around the corner and as it gets closer, real estate-related businesses are taking on more work. Basic title and mortgage tasks are taking longer to complete and that should persist for a while.
Get ahead of the curve and beat your contract dates handily. Use the checklist above and be responsive to your lender’s requests.
And, if at all possible, avoid closing on the Friday before Memorial Day and even the Tuesday after — it’s when office staffs are at their smallest.
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The sales of newly-built homes soared in March. Even more than what was expected. But the news may not be as glowing as what the media is telling us.