What's next for housing after the tax-credit surge?

Here is a little more data showing evidence of a spring home sales surge. The data charted above show pending home sales (or sales contracts signed on single-family homes) in Los Angeles. There were 951 contracts placed on single-family homes in April, a 27% increase from April 2009 and a 7% jump from March.

Many experts and real estate agents attribute the March and April increases to buyers rushing to take advantage of federal tax credits that expired April 30.

To qualify for the credit, buyers needed to sign a contract before April 30, and they need to close on those contracts before June 30. So expect a lot of pressure to seal all those pending deals in coming weeks.

The more important question is: What comes next? What will the post-tax credit housing market look like?

Many experts are predicting that the sales pace will slow and that home prices may even fall again this year. There is some evidence that this could be the case. Sales surged in October because buyers were trying to close deals before an initial Nov. 30 expiration for the federal credit (Congress extended and expanded the credit in November). The last deadline required buyers to close their deals by Nov. 30 -- as opposed to just signing a contract -- hence so many contracts being signed in October. Pending sales then dropped off in November.

Will we see another such decline in sales contracts in May and this summer? A lot depends on job creation, experts say, and the labor market in California and Los Angeles remains very weak. But if people feel a bit more confident about their employment situations in the coming months they may feel more comfortable with the prospect of purchasing a home. Working in the housing market’s favor is that affordability in California is very high and interest rates remain low.