While U.S. home prices increased 4.4% in the 2nd Quarter, according to today’s 2nd Quarter report from S&P [.pdf], the following considerations indicate that this increase is not a trend and home prices may even decelerate.
- The first-time homebuyer tax credit has practically expired as homes must have been under contract by April 30th in order to meet the extended September 30th deadline. As a result, first-time buyers will no longer receive 10% or up to $8,000 back, so there will be fewer home buyers, as point #2 shows. Additionally, home sales were higher in April than other month in 2010 – indicating a rush to take advantage of the credit while it was around.
- Total existing home sales fell 27% in July to the lowest annual rate on record with the National Association of Realtors.
- Foreclosures increased 4% in July and have exceeded 300,000 homes for 17 consecutive months – even outnumbering the number of new homes sold.
- The month-to-month home price indexes have increased 4.6% for 16 consecutive months, as the graph below shows, but June’s rate decelerated to 4.2% – breaking the recovery streak from the epic housing plummet.