Home Sales Fall after Tax Credit Expires

Here’s more evidence of the effect of the government meddling in the marketplace.  It’s sort of like the cliché about pushing on a balloon: no matter where you push, the balloon will expand somewhere else.

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending May 14, 2010.

Refi applications were up over the previous week while purchase applications were down significantly.  This was attributed to the expiration of the homebuyer tax credit.   Additionally, most interest rates were lower than the previous week.

“Purchase applications plummeted 27 percent last week and have declined almost 20 percent over the past month, despite relatively low interest rates.  The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season.  In fact, this drop occurred even as rates on 30-year fixed-rate mortgages continued to fall, and at 4.83 percent are at their lowest level since November 2009,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.  “However, refinance borrowers did react to these lower rates, with refi applications up almost 15 percent, hitting their highest level in nine weeks.”

So the homebuyer tax credit simply shifted buying activity to earlier than the buyers otherwise might have acted.


About rereno

Real estate investor
This entry was posted in Economy, Government, Real Estate and tagged , , , , . Bookmark the permalink.

One Response to Home Sales Fall after Tax Credit Expires

  1. Pingback: Home sales inching upwards in Reno area « ReReno's Blog, Reno/Sparks Real Estate

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s