It is certainly true that home sales are low overall, compared to 5 years ago, and will continue to be low for some time. Still, sales of previously owned houses rose to 5% in December – its highest level since January 2011. Corresponding to this great news is that the job market also has improved. It goes without saying that this is vital for a housing market rebound. In December, the unemployment rate fell to its lowest in almost three years. Layoffs have started going down, while hiring is on the rise. This, in turn, is helping consumer confidence. Home sales may continue to rise as everything is falling into place. The average sales price of previously owned houses went up from November to December by 0.3 percent.

Sales across the U.S. are increasing, and it was an increase of 10 percent in the Northeast, 8.3% in the Midwest, and 2.9% and 2.6% in South and West respectively. The number of unsold homes is going down, and they can be sold quickly based on last month’s selling pace. Home sales are increasing at a time when other economic standards are also going up. This signals an improving health to our economy. Mortgage rates are at their lowest, and home construction is increasing. The housing market needs a few more years to recover, but it is looking good right now. Here’s to hoping for the best.

Much buyer hesitation likely comes from government talks regarding adjustments to the Mortgage Interest Deduction, as well as the possible institution of a mortgage down payment requirement of up to 20%. Regardless, it is important to remember that these are talks only, and are not law. GNAR president Alice Walker says, “Hopefully those leaders will end those considerations and do more to find ways to strengthen and enhance the housing and real estate market.”

For a comparison of property sales between June 2010 and June 2011, see the chart below. For a more detailed analysis, see the GNAR’s July 7 press release.

The home buyer credits have been a great boost to home sales and we will see closings through the end of June that still qualify for the tax credit. However, we are also seeing buyers take advantage of the historically low rates that are still out in the market today. That’s not to say that the market will not feel the end of the tax credit because we expect it to soften a bit. But people always have to move for various reasons and Middle Tennessee is thriving more than many cites and areas in the country so the housing market is expected to remain strong.

Inventory of houses at the end of May was 24,007, down a little bit from the 24,598 reported in May of 2009 but still is a good supply of homes to choose from. With a good number of homes to choose from and historical low interest rates it remains a great time to purchase a home!

For those that are selling, this is a great time to have your house on the market as the last of the first time homebuyers look to get a house under contract before the end of April. At the same time, it is a good time to buy because of the tax credits for most buyers as well as interest rates that are still well below normal. There are good buys in almost every price range but it won’t always be that way. If you are ready, start looking. You will be glad you did.

This is all very good news and it looks like the first time home buyer’s credit has worked during the past year and continues to work now. It’s really a very good time to purchase a home as prices are down, interest rates continue to hold at near historic lows and, as long as you have a house under contract by the end of April, there are government tax credits available to you whether you are a first time, a move up or move down buyer in the market. We don’t expect this “perfect storm” for buyers to last much longer so the time is now.

Here is a comparison of sales data for the month of November:

Though things are improving and no one can say they aren’t, we do need to keep prospective. During 2009 there has been a very nice tax credit given to first time home buyers and the amount of foreclosures has had a direct reflection on keeping home prices low. These two things coupled with interest rates that have continued to be some of the lowest in history has had a very positive affect on housing. What we don’t know is how these things changing in 2010 will affect housing in our market.

It is the opinion of many economists that jobs will have more to do with the housing recovery than anything else. However, if you are employed and are ready to purchase a house as a first time home buyer or not, there are still tax credits available. Call me and I can give you the particulars and see if this is a good time for you to be purchasing a home.