Austin REAL ESTATE

Pending home sales 'fell off a cliff'

It was expected, but not this bad.  Experts did suggest that home sales would
drop once the homebuyer tax credit lapsed at the end of April, but no one
expected it to be close to a shocking decrease.  According to the National
Association of Realtors (NAR), pending home sales fell a whopping 30% in May.
Their index, which measures signed sales contracts but not closed sales, plunged
to 77.6 from 110.9 in April. It's even off 15.9% from a year ago when the nation
was barely emerging from the recession. "The pending home sales report is a
disaster," said Mike Larson, a real estate analyst for Weiss Research. "Sales
fell off a cliff after the tax credit expired. It's the biggest monthly decline
ever and the index is at its lowest level since NAR began tracking it in 2001."

Lawrence Yun, NAR's chief economist downplayed the damage a bit. According to
him, customers rushed into deals to claim the credit, borrowing from May sales.
Once the economic recovery comes into full swing, housing markets will heat up.
Those conditions include much lower home prices and extremely favorable mortgage
interest rates. The question is when -- or if -- the job market will ever bounce
back. "We're not creating jobs," said Larson. "The housing problems now are
being driven by broad economic problems.