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Housing market continues resurgence, but prospects hazy


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POSTED: Saturday, August 22, 2009

WASHINGTON » The U.S. housing market is rebounding faster than expected.

The question is, Can it last?

Home resales in July posted the largest monthly increase in at least 10 years as first-time buyers rushed to take advantage of a tax credit that expires this fall. Sales jumped 7.2 percent and beat expectations, the National Association of Realtors said yesterday.

“;We've got tens of thousands of homes perfect for the first-time homebuyer, and we've taken advantage of that,”; said George Hackett, president of Coldwell Banker Real Estate in Pittsburgh.

Sales hit a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June. It was the fourth straight monthly increase and the strongest month since August 2007. Sales had been expected to rise to an annual pace of 5 million, according to economists surveyed by Thomson Reuters.

The risks to that healthy pace, however, are job cuts, mortgage rates and a homebuyer tax credit that is over at the end of November. And the last one could be a doozy because first-time buyers are snapping up one out of every three homes.

First-time buyers get a credit of 10 percent of the purchase price of a home, up to $8,000. Singles must earn less than $75,000, and for couples earning more than $150,000, the credit phases out with higher incomes. The real estate industry is lobbying to have the credit extended, but it's unclear whether Congress will be swayed.

“;I would not be at all surprised to see a dip at the end of the year once the tax credit expires,”; said Robert Dye, senior economist with PNC Financial Services Group.

Fallout from the recession will linger for some time. Unemployment rose in July in 26 states and fell in one, including Hawaii, the Labor Department said yesterday. That is driving up foreclosures, which are not expected to level off until sometime next year.

Sales of foreclosures and other distressed properties made up about a third of all transactions last month, down from nearly half earlier this year.

The inventory of unsold homes on the market rose to 4.1 million, from 3.8 million a month earlier, as buyers who had held their homes off the market in the past decided to list them for sale. That's a 9.4-month supply at the current sales pace, unchanged from June.