NWA Homes sales up in apples-to-apples comparison
Why? In April 2008, the federal government started offering tax credits for first-time home buyers. Those credits influenced homes sales through the first half of last year as they were substantial, indeed. By the time the tax credit program expired last year, first-time buyers were eligible for up to $8,000 in cash from the IRS while qualified repeat buyers could claim up to $6,500. In the last round of credits, qualified buyers were directed to get their homes under contract by the end of April and close on them by the end of June, meaning year-to-year comparisons have been skewed by credits — if you pay people to buy something, there’s always a good chance they’ll jump at the offer.
The closed sales reports from July, then, give us a chance to finally compare markets operating under roughly similar conditions — July 2010 and July 2011 were both periods in which tax credits weren’t a major factor.
The numbers from northwest Arkansas are in and they show that sales in July this year were up considerably over those in the same month a year ago. Realtors in Benton, Carroll, Madison and Washington counties were involved in 593 single-family, residential closings — up 42.21 percent over 417 sales in July 2010. Through July, there were 3,577 sales — up 6.11 percent over 3,371 closed transactions through the first seven months of 2010.
Click here for the PDF version of the northwest Arkansas housing market report for July or here for a JPEG. Eric Harris — a Realtor with Weichert Realtors – Downum Group in Springdale — said the increased volume is encouraging, but noted declining home values are a concern for those selling homes.
“The good news is that year over year and for the month of July the number of homes sold in the region has increased significantly,” he said. “Bad for sellers and great for buyers is the sale price per square foot which dipped below $70 in the month of July 2011.
“Year to date the sales price per square foot was barely above $70. Price wise it is definitely a buyer’s market and a great time to buy a new home. With mortgage rates still at great rates, real estate is definitely on sale.”
Harris said those looking for a good deal are in a position to find one these days, due to dropping prices and interest rates that have been falling since February. According to the national Mortgage Bankers Association, the average national interest rate of 4.37 percent on a 30-year, fixed mortgage was the lowest of the year.
Those falling prices, by the way, should surprise no one. Simon Johnson and James Kwak, in a Washington Post column, pointed out two years ago that tax credits artificially inflated home values. Their theory held that prices of homes would fall once the tax credits were removed and we have, indeed, seen prices drop steadily over the past year.
How did sales in central Arkansas fare in July? We’ll have that report in the coming days, so stay tuned.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.