Home Sales Poised to Drop in Coming Months
Americans signed far fewer contracts to buy homes than expected in May, the real estate market's first month of functioning without a key federal stimulus.
The Pending Home Sales Index, which measures sales contract signings, fell 30 percent in May from April to a new record low, the
"If you're looking for a silver lining in housing, you aren't going to find it here,"
The federal home buyer tax credit was enacted by President Obama in early 2009 in an effort to revive the struggling real estate market. The initiative offered up to
"We now expect the index to remain close to the May level for a couple of months before a gradual rebound begins in the fall,"
But Pandl says the timing of the decline may be altered by new legislation. Late Wednesday, the
"We now have clear evidence that existing home sales are going to fall, it's just a question of when," Pandl says.
Tax credits aside, today's home buyers still have plenty of incentives to jump into the market. Real estate prices have fallen sharply from the heights reached during the housing boom. Meanwhile, 30-year fixed mortgage rates fell to 4.58 percent for the week ending
But with the unemployment rate still just below 10 percent, the labor market remains a key obstacle to the reformulation of housing demand, Larson says.
"The overall economy is rolling over, consumer confidence is slumping and, most importantly, we just aren't creating jobs," he said in a report. "With so many Americans unemployed or underemployed, the housing market is going to keep hurting."
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Home Sales Poised to Drop in Coming Months
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