Home sales dropped 16.7% in December, according to the National Association of Realtors. It’s the biggest drop on record (the record begins in 1968). MarketWatch has more on this tax credit hangover, partially caused by buyers who didn’t know the credit would be extended:
Sales had surged about 40% from June to November in response to the federal tax credit for first-time buyers, which was set to expire on Nov. 30. As it happened, the tax credit was extended until June 2010 and expanded to cover repeat buyers.
But buyers didn’t know the credit would be extended when they were shopping for homes in October. In order to close in December, they would have had to sign a sales contract by early November at the latest. Existing-home sales are recorded at the closing.
First-time buyers accounted for 43% of sales in December, down from 51% in November.
Inventories of unsold homes on the market dropped 6.6% to 3.29 million, the lowest since March 2006. The inventory figures are not seasonally adjusted. Inventories usually fall about 8% this time of year.