CT Home Sales Surge On Tax Credit

Home sales in Connecticut surged in May, continuing to show the effects of the federal tax credit on the housing market. Sales were up 39%, the biggest May increase for two decades. WNPR’s Harriet Jones reports.

To qualify for the $8,000 federal first time homebuyer tax credit, contracts had to be signed by the end of April, but closings on those contracts can be recorded up to the end of June, so Connecticut’s latest figures are still being supported by the stimulative effect of the credit. The sales figures come from the Warren Group, a Boston-based real estate data firm, and CEO Tim Warren says he believes there are other factors at play, including low interest rates, improving consumer confidence and pent up demand as the economy recovers. He also says the effect of foreclosures on the market is beginning to ease in Connecticut.

“REO sales – the sales of properties that are owned by banks and are on their balance sheets right now – those are a smaller part of the overall picture than they were a year ago. This year about 5% of the total sales of single family homes were REO properties – last year the comparable figure was 7%. So that’s some sort of a sign that sales are increasing without distressed properties bringing in a lot of the volume.”

Higher sales have not yet translated into big boosts in price – the median sales price for single family homes in the state was virtually unchanged in May from a year ago. Year-to-date in 2010, the median sales price has risen almost 5%.

For WNPR, I'm Harriet Jones.