Last Friday, President Obama signed a bi-partisan extension to the first-time home buyer tax credit program last week giving prospective buyers through June 30th, 2010 to close on a home and receive the $8,000 credit. In addition, the law contained an expansion of the former program to include homeowners who have occupied their current residence for five years who want to trade up to another home. These repeat buyers can now receive a credit up to $6,500. The income limits on the program for buyers to receive the full amount of the credit were also raised to $125,000 annually for an individual and $225,000 for a couple.
More signs that home prices are stabilizing came in a report from the National Association of Realtors on Monday that said the median price of a single-family home was up $7,000 in the third quarter over the second quarter marking the two quarters of consecutive gains. The national median price of $177,900 was still 11% lower than the same quarter in 2008 but the overall trend in prices appears to be moderating. NAR Chief Economist Lawrence Yun remarked, “A shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas, but we need a steady stream of qualified buyers to further reduce inventory and get us to a self-sustaining market.”
Mortgage rates have actually eased since last week with the benchmark thirty year fixed rate settling to nearly 5% with no points. The fifteen year is now below 4.50% at 4.375% with no points. Add a quarter percent for most government loan programs as these are typically slower to react to rate declines than conforming conventional loans. I do not see rates going anywhere anytime soon. They have continued to defy expectations and without any obvious signs of inflation on the horizon I expect they will continue to do so.