Luxury Real Estate

By: Spencer Soper of The Morning Call

But sales are up over same month a year ago. Trend expected to continue

Lehigh Valley home sales increased in January compared with their sluggish pace in the same month a year earlier, but prices continued their downward slide, according to Prudential Patt, White Real Estate's HomExpert Market Report.

There were 250 homes sold in Lehigh and Northampton counties in January, up 9.2 percent from a year earlier, according to the report released Tuesday. The median price of a home sold in January was $173,750, down 5.6 percent from a year ago.

Economists expect the trend of increasing sales and falling prices to continue until prices bottom out in the second half of the year. Falling home prices are making homes more affordable to first-time buyers, who are being lured into the market with a federal tax credit of up to $8,000.

Putting downward pressure on the market are high joblessness and a large number of foreclosures.

The homebuyer tax credit, which was supposed to expire at the end of November, has been extended and expanded to include existing homeowners.

Now, buyers who have owned their current homes for at least five years are eligible for tax credits of up to $6,500 if they buy a new primary residence. First-time home buyers, defined as anyone who hasn't owned a home in the last three years, still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30 and close by June 30.

There is debate among real estate experts about whether the expanded tax credit will increase sales of higher-priced homes, which would stabilize prices. So far, that hasn't happened. But activity in the seasonal real estate market historically picks up in the spring.

''I think the urgency (to get the tax credit) will unfold in weeks to come,'' said Brad Patt, senior vice president of Prudential Patt, White. ''We haven't seen it yet.''

The housing market is a key indicator of the region's overall economic health. Household wealth rises and falls with the housing market, influencing consumer confidence and spending decisions, economists say. For most homeowners, their home is their largest investment.

It took an average of 82 days to sell a home in January, up from 79 days a year earlier, according to the Prudential Patt, White report. The average monthly inventory in January was 4,957, down 6 percent from a year earlier.

The months supply of inventory –– a measure of how long it would take to sell all homes on the market at the existing sales pace –– was 8.3 months in January, down from 14 months a year ago. Foreclosure activity in the Lehigh Valley dropped in January, but remained a drag on the market.

There were 244 foreclosure notices issued in Lehigh and Northampton counties in January, according to the national foreclosure tracking firm RealtyTrac. That's down from 263 in the same month a year earlier. spencer.soper@mcall.com 610-820-6694