It wasn’t that long ago that we were talking about how far home sales had dropped (a new record low at the time) and the causes behind it. It was just announced (yesterday or today) that new home sales have “unexpectedly” dropped another 12.4% to a new all time record low.
To be completely honest, I’m not sure why it was so unexpected that the sales would continue to drop. The economy is still just as bad as it was. It hasn’t necessarily gotten any worse, but it certainly hasn’t made any great rebounds either. I still maintain that anyone who was in a financial situation to buy a new house likely did already to take advantage of the tax credits that were in play until the end of April. On top of that, there’s still talk of more “stimulus” to the housing industry. So it’s likely that there are some who are holding out for a new tax credit to show up. Will that happen? I hope not, but you just never know. Another factor may be the still falling value of homes. The further the prices fall, the more likely it is that you’ll end up underwater on it. If you can’t get out from under that, it’s unlikely that you’ll be able to sell without a large amount to cover the difference.
I will continue to not be surprised by these “unexpected” drops in sales. How about you? Are there factors that I’m not taking into account that might rescue the sales figures? (Wizards and warlocks don’t count.)
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I completely agree! I have no idea how people can write about a rebound in the housing market. Just a brief glance at the economy in general and the housing market in particular will tell you that more trouble lies ahead!
Rates can’t continue to go down, the tax credit did nothing but move purchases ahead a period or two, and unemployment will not fall anytime soon!
It’s nice to see other bloggers questioning the mindlessness of headlines these days. It seems that just because some government bureaucrat says “recovery”, the major media outlets jump on board the echo train and never stop to ask whether the facts support the statements!