Friday, October 16, 2009

Housing Continues to Struggle


Housing continues to be buffeted by multiple forces. A weak economy, dismal job market, foreclosures, fears of further declines in home values and tight credit conditions are among the factors weighing the housing market down.

In August, existing home sales fell for the first time since March — dropping from 5.2 million in July to 5.1 million, at a seasonally adjusted annual rate. However, the August sales rate was an improvement over the August 2008 sales rate of 4.9 million.

Even so, the recent slowdown in sales is somewhat troubling in the face of the looming Nov. 30 expiration date for the first-time home buyer tax credit. The tax credit should have boosted sales for August as households rushed to meet the deadline, and it may still give a boost to September existing homes sales.

New home sales posted their fifth monthly increase in August, though just barely, rising to 429,000 for the month, at a seasonally adjusted annual rate up from 426,000 in July. That, however, was below the August 2008 sales rate of 444,000.

At this point, requirements for making a simple home purchase and lining up a mortgage precludes anyone who is not already in the sales process from utilizing the first-time home buyer tax credit.

It does appear that new home sales have benefited indirectly from the first-time home buyer tax credit by enabling owners of existing homes to sell their homes to first-time buyers eligible for the tax credit. Once their homes were sold, this allowed them to buy newly built houses.

 

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Anthony J Crecco

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Thornwood NY  10594

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