The U.S. existing-home sales figures came out (Virginia-specific numbers will be coming shortly). They show a drop in March — sales were down 6.3% from March 2010.
Added to that was the small jump in month-to-month numbers; March 2011 sales were up 3.7% over February, compared to an 8.4% increase in 2010.
All of which goes to our point and our plea to Congress: Don’t mess with the mortgage interest deduction. The market clearly has not yet recovered, and making — or even talking about — changes to the MID will only weaken home sales, and could stall the housing recovery.
Because, despite that March drop, there is good news in the numbers: While sales lagged the 2010 figures, they were only down 6.3% — but in 2010 the homebuyer tax credit was in effect, artificially inflating sales.
Perspective: When the tax credit expired, sales dropped 25.5% (from July 2009 to July 2010). How about previous Marches? When the housing bubble had its biggest ‘pop,’ sales dropped 19.3% from March 2007 to March 2008.
So while this year’s drop of 6.3% may not seem like good news, put in the context of the big bust three years ago — and taking into account last year’s tax credit — you see it’s not so bad after all. Over time, slowly but surely, the market is recovering.
And that’s why the idea of removing or threatening the MID incentive gets us riled up. Americans are recovering from their skittishness about real estate. Lenders, hopefully, will begin to loosen their purse strings again. The ball is beginning to roll. Let’s make sure it continues.
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Some more info: Here’s a handy seven-year chart of existing-home sales from Calculated Risk. It uses NAR’s numbers, not seasonally adjusted.
Note that 2011 numbers (dark orange) lag 2010’s, but also that they’re recovering steadily since the expiration of the homebuyer tax credit. You can see when that happened — look at the big drop in 2010 sales (light orange) from June to July.