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Federal tax credit pushes California home sales upward

California home sales increased 12 percent in July over July 2008, while the median home price was 19.6 percent lower - reflecting the continued domination of the market by buyers acquiring distressed properties and the effects of a federal tax credit for first-time buyers.

The data were released today by the California Association of Realtors, whose president, James Liptak, credited the tax credit as playing "a critical role in the purchase decision of many buyers. Nearly 40 percent of first-time buyers said they would not have purchased a home if the tax credit was not offered. Because the tax credit has helped so many first-time buyers become homeowners, it is critical that Congress extends the credit beyond the Dec. 1 deadline, and includes all buyers, not just first-timers."

Closed escrow sales of existing, single-family detached homes in California totaled 553,910 in July at a seasonally adjusted annualized rate, according to information collected by CAR from more than 90 local real estate associations. That was 12 percent higher than the revised 494,390 sales pace recorded in July 2008. Sales in July 2009 increased 8.1 percent compared with the previous month.

The "high desert" area of Southern California had the steepest decline, 67 percent, while Santa Clara County had the smallest drop, 32.4 percent.