Austin-area home resales jumped 58 percent last month from November 2008 as buyers scrambled to take advantage of low mortgage interest rates and a tax credit for first-time buyers.
But don’t expect those big percentage gains to continue – sales could slow next year due to rising mortgage interest rates and the end of the tax credit, which Congress recently extended through April and expanded to additional buyers.
November’s percentage increase was the biggest in more than a decade and followed a 38 percent jump in October, according to the Austin Board of Realtors. However, the 997 sales in November 2008 were unusually low, reflecting the worsening economic downturn at the time.
Last month, 1,576 homes were sold, the board said. The median price was $179,900, down 2 percent from a year ago.
More challenges are ahead because of “minimal prospects for short term improvement in the local economy and our job market,” said Eldon Rude, local director for Metrostudy, a housing research firm.
He said he doesn’t expect the market to show strong growth “until the employment picture brightens and consumer confidence strengthens.”
Rude said the sharp increase in November resales “was definitely tied to the availability of the tax credit but was also related to the significant slowdown in sales activity late last year as the U.S. recession took hold.”
With the extension, first-time buyers may still qualify for up to $8,000, but other buyers can get up to $6,500. Buyers must have a house under contract by the end of April and close on the sale by the end of June.
Year-over-year sales were up 31 percent in the Dallas area, also one of the biggest increases on record; 32.8 percent in Houston; and 52 percent in San Antonio.
Reed said he thinks the tax credit alone wasn’t enough to spur the Austin area’s November surge.
He said that interest rates of less than 5 percent also were a factor, as was the specter of rising rates. Reed predicted that interest rates will move into the mid-to-high 5 percent range by the end of next year’s first quarter.