Existing Home Sales Moving Back To Pre-Tax Credit Levels?
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The chart below illustrates how existing home sales appear to be pulling back to levels that would have been expected without a surge in demand stemming from the first time home buyer tax credit, despite the programs extension/expansion. This could be an indication that housing demand was mostly sopped up by the original tax credit, leaving few buyers in the market to take advantage of the new program. The sector could face additional strife over the months ahead as mortgage rates are generally expected to rise once the Fed stops purchasing MBS at the end of March. Whether or not the government’s new tax credit will drive a new set of buyers into the market is yet to be seen, but January’s pending home sales (Thursday 10:00AM EST) could provide some clues toward the strength or weakness in home sales over the next couple months.
Existing Home Sales
Source: Bloomberg
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