First-Time Homebuyers in Lancaster County Spurred By $8,000 Federal Tax Credit

By Tim Mekeel, Intelligencer Journal/Lancaster New Era, Pa.

Oct. 28--The road to recovery continues to be paved by first-time homebuyers.

Lifted by a surge in sales of entry-level homes, pending home sales here jumped 26.8 percent in September.

There were 464 pending home sales last month, up from 366 in September 2008, the Lancaster County Association of Realtors reported Tuesday.

Most of that growth originated in the entry-level category, as first-time homebuyers continued to be spurred by an $8,000 federal tax credit.

That category, consisting of homes priced from $100,001 to $200,000, saw pending sales leap 42.1 percent.

Nearly all of the other price categories enjoyed increases, too, making September the fourth straight month to exceed levels attained last year.

But the new mark did more than surpass the recession-weakened figure of September 2008.

It also exceeded the average volume, 437, of the past five Septembers.

"I think our market is doing well," said LCAR president Scott Ulrich.

"People are regaining their confidence. They're realizing that we're going to get through this."

Ulrich said now is a good time to take advantage of the many "tremendous opportunities" in the local housing market.

Ulrich said mortgages rates are low, home inventories are ample and the local economy is "fundamentally sound."

Meanwhile, prices continue to slide, making homes more attractive to buyers.

The median price of homes sold in September was down 2.9 percent to $169,900, according to LCAR.

Though pending home sales have rebounded strongly, it's unknown whether the momentum will continue once the tax credit ends.

"Hopefully, it will," Ulrich said.

The credit is available to first-time homebuyers who complete their purchases by Nov. 30, unless Congress extends the program.

Taking a closer look at the September results, pending home sales in that entry-level category -- the biggest segment of the market -- generated that 42.1 percent gain by jumping to 270 from 190.

Pending home sales in the second-biggest category -- homes priced from $200,001 to $300,000 -- rose to 104 from 89, or 16.9 percent.

Pending home sales in the category of $300,001 to $400,000 were unchanged at 21.

In the category of $400,001 and up, pending home sales increased to 13 from 11, or 18.2 percent.

At the other end of the pricing spectrum, homes priced at $100,000 or less, pending sales grew to 56 from 55, or 1.8 percent.

Pending home sales refer to homes that are placed under contract, or under agreement.

LCAR considers pending home sales the most current indicator of market activity.

A home typically goes under contract a month or two before the transaction gets settled, meaning the deal gets finalized.

The number of homes sold here, like the number of pending deals, was higher in September as well.

The number of homes sold here rose 22.4 percent, to 420 from 343, surpassing the year-earlier period for the second straight month.

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