Last remnants of tax credit show up in June reports

What are we to make of June's market reports? Closings of existing homes were up from last year, the Case-Shiller price index increased 1.3% from April to May, and new home sales jumped 24% over May's lows. Yet pending sales dipped, purchase mortgage applications continued to decline, and inventory is back on the rise.

See Cincinnati MLS based charts for June

The "conventional wisdom" suggests that what we are seeing is the result of home sales brought forward with the tax credit and the inevitable fall off once it ended. That may ultimately prove true. I can say from my own experience that buyer activity seemed to fall off a cliff in May and June, but has since taken a recent uptick as more buyer calls come in and open house activity increases.

A somewhat unexpected change in the market is that the average sales price of homes being shown is taking an upturn. The cause for this is that we are no longer seeing the first-time buyers chasing the low end of the market as we did earlier in the year. Buyers now tend to be those of necessity (such as those relocating for work) and are more comfortable at higher price points. While foreclosures will continue to pressure prices for the foreseeable future, don't be surprised if the average sales price for existing home sales increases significantly over the next few months.