Housing market sinks after tax credit ends
Not good news for a market that struggled even with the credit. The underlying weakness of the housing market again seems to be showing itself. And that’s not good news for the overall economy either. Diana Olick takes you through the numbers:
Everybody take a nice long look at today’s Pending Home Sales Index from the National Association of Realtors, because it’s just about the last positive picture we’re going to see for a while.
Those numbers she’s talking about show up in the May and June reports, but then she says, “look out”:
This index is based on contracts signed in August, and that’s how the credit was set up; you had to sign your contract by April 30th and close by June 30th in order to get your $8000 if you’re a first time buyer and $6500 if you’re a move up buyer.
And then came May, traditionally the height of the spring housing season.
Mortgage applications to purchase a home began to sink. Now, four weeks later, mortgage purchase applications are down nearly 40 percent from a month ago to their lowest level since April of 1997.
This is another indicator of a weak economy that still hasn’t yet sorted itself out yet. While the tax credits certainly helped sell some houses, it also hid that weakness that still exists. Look for the July report (Pending Home Sales Index) to again show we have a long way to go to full recovery.