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Home Publications Blogs Beat the Press People Were Not Signing Home Sales Contracts in November 2009 to Get the Tax Credit

People Were Not Signing Home Sales Contracts in November 2009 to Get the Tax Credit

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Thursday, 30 December 2010 18:02

The NYT told readers that the November 2010 index for pending home sales was:

"5 percent lower than November 2009 when buyers were scrambling to close purchases to qualify for the first federal tax credit."

Actually, the credit that expired in November of 2009 was based on completed sales. It typically takes 6-8 weeks from when a home is put under contract until the sale is completed. As a result, no one who signed a contract in November of 2009 could have reasonably expected to complete the sale in time to qualify for the tax credit. The actual surge in contracts was in September and October. Pending homes sales in November of 2009 were 18 percent below the October level.

Comments (3)Add Comment
Have a great new year!
written by cemmcs, December 30, 2010 7:47
Dean, I really appreciate your work here. Thank you very much.
Have a Great New Year!
written by cemmcs, December 30, 2010 7:49
Dean, I really appreciate your work. Thanks.
...
written by David S., January 01, 2011 11:48
Dean,

Your point is well taken but the facts and the semantics here are a tangled mess.

The fact that people were scrambling to "close purchases" in November 2009 is consistent with your point that the tax credit was available for "completed sales" effective by the close of that month, because a "completed sale" (as you defined it here) is synonymous with a "closed purchase."

Nonetheless, you are correct to criticize the Times article, because a comparison of November 2010 contracts with November 2009 closings indeed is an "apples and oranges" comparison.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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