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Tax Credit Effect Nears End, But Housing Market May Remain Stable

The housing market rose to a four-year high last month, according to new figures out Tuesday. Single family home sales rose 25 percent in June compared to a year ago.

The number of condos that sold last month jumped 31 percent compared to June of last year. The median price of homes also rose.

"What that says is the tax credit did its job," said Kevin Sears, the president of the Massachusetts Association of Realtors (MAR). He said the tax credit applied to home sales that are still closing now, but originally went under agreement by April 30.

Inevitably, the effect of the home buyer tax credit will fade. The question is whether the positive momentum will continue.

"I don’t have a crystal ball," Sears said. "But what I can tell you is the factors are favoring the housing market remaining stable."

Those factors include low interest rates and a recovering Massachusetts economy, Sears said.

Tim Warren, who heads the real-estate tracking firm The Warren Group, agreed that the tax credit has served its purpose. He also said the likelihood of a stabilizing housing market is strong.

"I'm cautiously optimistic that the housing market will continue to do pretty well," he said, while acknowledging the second half of the year will be weaker than the first half.

His firm's latest data echoes the positive numbers from MAR. The Warren Group analyzes home sales differently and reported a 28 percent increase in single-family home sales compared to June 2009.

Meanwhile, the firm calculated a 7 percent increase in the median selling price.

"That will probably convince people that the worst of the decline is over," Warren said.

This program aired on July 27, 2010. The audio for this program is not available.

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