YAKIMA, Wash. -- With the number of homebuyers still eligible for federal tax credits dwindling, new home sales in Yakima County took a huge hit in July.
The county sold just a dozen new homes in July, a drop of 61.2 percent from June, according to Headwaters-The Source, a Selah-based firm that tracks real estate sales. It was also a 36.8 percent drop from July 2009.
A final deadline of Sept. 30 is still on the books for the tax credit, but most took advantage of an earlier June 30 deadline, making July a rough month for home sales.
"It's not a big a surprise," said Pat Strosahl, CEO of United Builders of Washington in Yakima. "Everyone in the housing industry saw it coming."
In June, homebuyers rushed to qualify for either an $8,000 first-time homebuyers credit or a $6,500 repeat buyer credit.
The tax credits officially expired April 30, but buyers who had homes under contract by that date could also qualify for the credits if they closed on the home before June 30. That closing deadline has since been extended to Sept. 30.
"I think without that tax credit incentive, we would have seen in April and May what we're seeing now," said Chris Nass, an agent with Ross & Associates in Yakima and president of the Yakima Association of Realtors.
New home sales are also dampened with a still-high existing home inventory, Nass said. That would also discourage many builders from construction spec homes, which are built without a purchase contract.
Sales of new single-family houses nationwide fell to a record-low annual rate of 276,000 in July, a 12.4 percent drop from June and a 32.4 percent drop from July 2009, according to numbers released by the Commerce Department Wednesday.
Unlike the Yakima County data, which includes sales of all newly-built homes, the national figure only includes sold spec homes, said Glenn Crellin, executive director for the Washington Center for Real Estate Research at Washington State University.
"I don't know how many home builders in their right mind would be building on spec today," he said.
Most Yakima County home builders are being more prudent in how much they build because of the market.
"So the inventory of new homes is a little more controllable," Nass said.
Strosahl's projection for selling new homes at Zillah Lakes, United Builders' golf course and lake development off Interstate 82 has been pushed back three to four years.
When completed, the planned community would include 650 housing units and a variety of amenities, such as a golf course and a commercial center.
At the same time, United Builders is being aggressive in its marketing efforts with the belief that record-low interest rates will lure some buyers on the fence to buy homes at Zillah Lakes and its other housing developments.
Rates have continued to drop in the last few weeks to the sub-5 percent range, an unheard of rate a few years ago.
"We have booked several sales since the (tax credits) ran out," he said. "We are expecting more and we see signs of resurgence of housing activity."
But Crellin believes that the recovery is not that imminent, especially with unemployment still at high levels.
Last month, for example, unemployment in Yakima County was 7.7 percent, up from 7.1 percent during the same month in 2009.
"Until we start seeing employment growth, and I mean meaningful employment growth, I have a hard time being optimistic," he said.
* Mai Hoang can be reached at 509-577-7685 or mhoang@yakimaherald.com.
