Home sales in the Buffalo Niagara region shot up 10 percent last month, while the median sale price rose 3 percent, as first-time home buyers flocked into the market before the $8,000 federal tax credit expires.
The number of closed sales rose to 1,184 from 1,075 in August 2008, according to new figures from the Buffalo Niagara Association of Realtors.
That's the second-highest tally for that month in more than 15 years and, with July's sales of 1,192, marks the highest total for any two-month period.
As a result, sales closed year-to-date are now down 4 percent from the same eight-month period last year, which marks a narrowing of the year-over-year gap.
Officials of the realty trade group also say they expect a high number for closings this month as well.
"That's because of the tax credit. So we're excited," said John Leonardi, executive vice president of the realty organization. "We're going to have a strong push on closings toward the end of the year."
But all good things must come to an end. Last month's closed sales figure is down1 percent from July.
And pending home sales, an indicator of closings over the next couple of months, fell3 percent to 813 from 834 a year ago and13 percent from 938 in July.
The monthly total was the lowest since February and the lowest for August in more than 10 years.
"The $8,000 tax credit really worked. But now we're starting to see the market cool slightly," Leonardi said.
To qualify for the tax credit, home buyers must close their purchase by the end of November.
That generally means signing a contract by the end of this month.
"First-time home buyers are drying up," Leonardi said. "People realize that if they're not locked in [to] close by Nov. 30, that they're not going to be able to take advantage of that. So that's a concern."
Economists and supporters say the tax credit has gone a long way toward sustaining the housing market and helping to revive the national economy.
They say it has exceeded expectations, driving thousands of home sales that might or might not have been made anyway.
But they also worry that the economy isn't yet strong enough to keep the momentum going without the credit.
In response, calls are mounting for Congress to extend, enlarge or even expand the tax credit to all home buyers.
The National Association of Realtors called Tuesday for its 1.3 million members to write or call federal lawmakers to urge action.
Wednesday, Obama administration officials said they were considering seeking an extension of the credit.
"Unless Congress acts and acts quickly, people are still nervous about the economy, and they need that incentive for the buyers to get out there," Leonardi said. "So we're really anxious that they'll be able to extend it."
Leonard said a changing housing market does not mean that a tax credit needs to be permanent.
But with the nation still facing nearly 10 percent unemployment, economic conditions in many areas have still not improved or even bottomed out, he noted.
"We can't continue to give tax credits, but we have to get the market back to some kind of normalization, and we need to incentivize people to buy property," he said. "As the economy stabilizes, we'll go back to normalcy. But that may not happen for another 12 to 18 months.
"We really need this economy to get moving. The housing market is the one instrument that can really do that."
The median sale price for closed homes rose 3 percent to $115,000 -- the highest for August in nearly a decade -- from $112,000 in August 2008, though that was down 3 percent from $118,600 in July.
The average sale price fell1 percent from both a year ago and July, to $132,072.
But the total dollar volume of closed sales jumped 9 percent, in line with closings themselves, to $162 million from $149.3 million a year ago.
New listings rose 7 percent to 1,739 from 1,630 a year ago and by 4.8 percent from 1,659 in July.
But active listings, representing the available inventory of homes for sale, fell 10 percent to 5,547 from 6,137 a year ago and by 3 percent from 5,700 in July.
That inventory shortage could reflect a conscious decision by sellers to hold off marketing their homes until conditions improve.
"People want to move up, but there are no people buying their houses, so people may have decided to wait [before putting] the house back on the market," Leonardi said.