Why Housing is Headed for Second-Half Headaches
Luke Mullins
Although home sales increased more than expected in April, real estate experts are expressing concern that the market may face renewed downward pressure in the second half of the year.
The optimistic looking data reflects a number of favorable conditions in today's market. Home prices have fallen precipitously from the peaks reached during the housing boom, helping restore affordability to many markets. Rates on 30-year fixed mortgages remained in an attractive range in April, averaging just above 5 percent for the month. Meanwhile, recent government data suggests that the labor market may finally be recovering from a protracted period of job losses.
Much of the improvement is rooted in the looming expiration of Uncle Sam's home buyer tax credit, which offers qualified buyers up to
Many economists, however, expect sales to slow once the tax credit expires. That's because the credit likely helped pull forward sales that would have taken place in later months, with buyers scrambling to take advantage of the government incentives.
The market's recent price gains could soon reverse course as well. The backlog of unsold homes increased in April, with the months' supply of unsold inventory hitting 8.4, up from 8.1 in March. (These figures are not seasonally adjusted.)
For his part,
So while lower prices, cheap mortgage rates, and government tax incentives have created some compelling reasons to jump into the real estate market today,
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Real Estate - Why Housing is Headed for Second-Half Headaches
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