Housing Demand Evaporates As Stimulus Ends
Luke Mullins
Demand for housing has plunged to historic lows now that Uncle Sam has removed a key stimulus program from the market, a development that threatens to torpedo a real estate rebound as well as a broader economic recovery.
Sales of newly constructed homes in July dropped 12 percent from the previous month to their lowest level since recordkeeping began 47 years ago, the
The discouraging news comes a day after the
New home sales increased this spring as buyers scrambled to sign contracts by
The pullback is sales is occurring in the face of two forces that traditionally pull buyers into the market: lower prices and cheap mortgage rates. Home prices in 20 major cities have dropped about 29 percent from their 2006 peaks, while rates on 30-year fixed mortgages fell to 4.56 percent in July. But
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First, the weak labor market is hog-tying demand.
"Further, the new-home market faces stiff competition from the large number of distressed homes on the market," Chen said in a report. "This is keeping the months of inventory for new homes elevated, despite the near-record low number of them available for sale."
Sustainable job creation is essential to rekindle enough demand to absorb the glut of unsold homes and spark a real estate recovery.
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Real Estate - Housing Demand Evaporates As Stimulus Ends
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