Housing Market Slows Following Expiration of First-Time Buyer Credit

The housing market has slowed dramatically following the April 30th expiration of the first-time home buyer tax credit. Take a look at the chart below, which shows the NAR's Pending Home Sales Index.

The index tracks the number of purchase contracts that are signed in each month. It is normalized that the average for 2001 is 100.

In order to qualify for the tax credit, buyers had to be in contract by April 30th. There was some question as to how large an impact an $8,000 credit would have on buying activity. Now we know. Nationwide, pending home sales fell 30% from April to May. In the western region, pending home sales fell 21%.

Anecdotally, the San Francisco housing market seems to have slowed as well. I'll address this in an upcoming posting.