June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months. “Only when jobs are created at a sufficient pace will home sales return to sustainable, healthy levels,” said Lawrence Yun, NAR Chief Economist.

Note: The RE/MAX National Housing Report on 54 metro areas, which is not annualized, showed a 5.6 percent increase over June 2009 sales.

All Housing Types:
1. June Inventory: 3.99M, +2.5% from May, +2.8% from June 2009
2. Months Supply: 8.9 months, up from 8.3 months in May.

June Practitioner Survey:
1. Distressed properties made up 32% of all sales (up from 31% in May).
2. First-Time Buyers purchased 43% of all homes sold (down from 46% in May).
3. Investors accounted for 13% (down from 14% in May).

Mortgage Interest Rates:
1. June 2010 = 4.74% (June 2009 = 5.42%)
2. May 2010 = 4.89%
3. April 2010 = 5.10%
(National average commitment rate from Freddie Mac)

Updated 7/22/10

Here are the top 10 things the IRS wants you to know about the expanded credit and the qualifications you must meet in order to qualify for it.

1. You must buy – or enter into a binding contract to buy a principal residence – on or before April 30, 2010.
2. If you enter into a binding contract by April 30, 2010 you must close on the home on or before June 30, 2010.
3. For qualifying purchases in 2010, you will have the option of claiming the credit on either your 2009 or 2010 return.
4. A long-time resident of the same home can now qualify for a reduced credit. You can qualify for the credit if you’ve lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the new home is purchased and the settlement date is after November 6, 2009.
5. The maximum credit for long-time residents is $6,500. However, married individuals filing separately are limited to $3,250.
6. People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after November 6, 2009. The full credit is available to taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers.
7. The IRS will issue a December 2009 revision of Form 5405 to claim this credit. The December 2009 form must be used for homes purchased after November 6, 2009 – whether the credit is claimed for 2008 or for 2009 – and for all home purchases that are claimed on 2009 returns.
8. No credit is available if the purchase price of the home exceeds $800,000.
9. The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.
10. A dependent is not eligible to claim the credit.

For more information about the expanded First-Time Home Buyer Credit, visit IRS.gov/recovery.

Links:

* First-Time Homebuyer Credit
* IR-2009-108, First-Time Homebuyer Credit Extended to April 30, 2010; Some Current Homeowners Now Also Qualify

U.S. Economic Outlook: July 2009

Home Valuation Code of Conduct – Home Appraisals -IMPORTANT
Other regulatory changes have been implemented by Fannie Mae and Freddie Mac’s adoption of the Home Valuation Code of Conduct (HVCC) on May 1, 2009. NAR Government Affairs is taking several steps to raise concerns about implementation of the HVCC, its effect on consumers, and the use of appraisal management companies (AMCs) by lenders in some areas of the country. HVCC regulations also have the potential to affect closing timelines.

Here is an Information Pack on the issue.

Market Commentary

Housing Recovery Slowed by Economy.  Recovery in our nation’s housing sector has taken a step backward. Most economic and housing measures and indicators suggest continued weakness in the housing markets during the first half of this year. We believe the Case Shiller twenty city home price index will drop another 8 to 12 percent before home prices begin to stabilize. Inventories remain excessive and residential construction activity is at a standstill.

Market Insight

Bank Problems and the Housing Sector.  The U.S. banking system is ailing and further deterioration could have serious negative implications for the economy and housing sector.  First, it is now clear that large banks are too big to fail and that creates perverse incentives. Second, taxpayers via government injections are paying for the bailout of banks and that brings up fairness issues. Third, banks are now being positioned to be the primary focus of mortgage lending and that could stifle competition at some point.

Industry Intelligence

How Far Has Fannie Mae Fallen.  Nearly half of Fannie’s loss occurred in the fourth quarter, after it was “placed under conservatorship” by the Treasury Department in September.  Immediately, Treasury began to use Fannie and Freddie to buy up mortgage backed securities at a loss in an effort to restore faith in the MBS market.  Now it is clear that Fannie and Freddie will be the Obama Administration’s primary conduits for refinancing and modifying mortgages held by foreclosure prospects-and the costs will be borne by the taxpayers.

Federal Ownership of Citigroup Reaches 36 Percent.  Investors have punished the shares of Citigroup and other banks in recent weeks out of concern the government could nationalize troubled banks, which would involve replacing management and wiping out shareholders.

Government Watch

Support Grows for Foreclosure Policy.  Two national surveys conducted immediately after President Obama released the outline of his foreclosure plan ten days ago show a marked shift in public opinion in support of using government aid to help homeowners having problems paying their mortgages.  Yet the nation remains split over whether the policy is fair or unfair to those who have met their mortgage payments.  

Obama Budget Limits Mortgage Interest Deduction.  Last week President Barack Obama proposed $634 billion in new taxes on upper-income Americans and cuts in government spending over the next decade to pay for his promised health care expansion. The new taxes included a limitation on the amount taxpayers earning over $250,000 can deduct for mortgage interest payments and other deductions.

House to Vote on Foreclosure Bankruptcy Changes. The Obama Administration has made the bankruptcy legislation a central plank of its plan to prop up the housing market. However, officials say they view it as a last resort, to be used only when serious attempts at voluntary modifications fail.

Looking Ahead

Pending home sales for January is expected to fall a bit, reflecting continued weakness in the housing sector. Housing demand has retreated due to massive job losses and falling consumer confidence. Mortgage applications for the week ending March 4 are expected to hover near their cyclical lows due to a weak economy and tight credit conditions. 

Subscribe today and get these stories and more!  Reecon Advisory Briefs summarize articles in each week’s Reecon Advisory Report, an independent source of news, insight and actionable intelligence on the real estate economics. The Reecon Advisory Report is published weekly by Reecon Advisors, Inc. It is available by subscription at  Reecon Advisory Report.  Copyright © 2009 by Reecon Advisors, Inc.  All rights reserved.

Get a FREE one-month trial subscription to the weekly Reecon Advisory Report and read the full text of these stories and more, plus the Reecon Database of housing economic data.  Just send your email address to:support@reeconadvisors.com.