Existing Home Sales Spike: Last Hurrah?

WASHINGTON D.C. (TheStreet) -- Existing home sales increased by a large than expected 7.6% in April, almost 23% ahead of last year's pace. The question on everyone's mind, though, is will the recovery in the U.S. housing market last?

The April existing home sales report from the National Association of Realtors is the "last hurrah" so to speak, of the federal government's first-time home buyer tax credit. While home buyers who close on home purchases by the end of June can still receive the credit, April was the general deadline for the federal housing market incentive.

The last minute buying spree triggered by the expiration of the home buyer tax credit pushed existing home sales to an ever higher level than economists expected. The general consensus had been a 6% spike in April triggered by the looming expiration of the home buyer credit.

The March existing home sales number was also revised to show a greater increase than was previously reported, to up to 7%. First time home buyers accounted for 49% of home sales in April, up from 44% in the previous month.

The National Association of Realtors downplayed the April performance and sent a message of caution with the release of the April numbers. Lawrence Yun, NAR chief economist, said, "The upswing in April existing-home sales was expected because of the tax-credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires."

The NAR economist did note, however, that the recent recovery in the U.S. economy, and woes in Europe that have led to continued historically low mortgage pricing, should be modest positives in the months to come. Nevertheless, unemployment and the foreclosure pipeline will remain drags on the housing market.

While total inventory was higher yet again in April, the NAR reported stable pricing in many more markets across the U.S. The median home price was $173,000 in April, up 4% year over year, and the percentage of "distressed" homes in sales dropped from 35% to 33% in April, the NAR reported.