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It looks like the housing market is coming back, but there's still reason to be careful. In July, home resales had their highest monthly increase in at least a decade. The rush is driven in part by a tax credit that expires on November 30, 2009. The rate of sale grew 7.2%, ahead of expectations.
Last month, sales hit a seasonally adjusted annual rate of 5.24 million in July -- up from a 4.89 million in June. This is the fourth month in a row in which seasonally adjusted sales increased, and it was the strongest growth rate since August 2007. A Thomson Reuters survey had forecast 5 million, but the reality exceeded that.
Of course, the good news is clouded by fears that further job cuts, an increase in mortgage rates, and the expiration of the tax credit could lead to another drop in sales and home values, especially for all the recent first-time homebuyers who would see their initial forays into home ownership sink underwater. First-timers are picking up one of every three homes sold.
So, there's a sign that the economy is recovering, but there are still pressures from several fronts that could turn the trend. Again, the sentiment is: "proceed with caution."
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