One of the main causes of the Great Recession was the near crash of the housing market. Just when we thought we were headed towards economic recovery, we got punched in the face with more grim economic news: Existing home sales in July dropped 27.2% – the lowest level since May 1995, according to the National Association of Realtors (NAR).
Why such a huge drop?
The first time home buyer tax credit expired on April 30th, but all homes had to close by June 30th in order to receive the tax credit. This tax credit, similar to the “cash for clunkers” program from last summer, sparked a temporary boost in home sales. In April, existing home sales jumped 8%, fell 2% in May, fell 5.1% in June and now the precipitous July drop by 27.2%.
We should note that interest rates for a 30-year fixed mortgage are at record lows – around 4.5% – and home sales still plummeted.
We need real, long-term fixes to the housing market, which consists of banks lending more money, but lending money to qualified home buyers.
Loading ...
Pingback: Credit Card Debt at Lowest Level in 8 Years | How to Save Money, Reduce Debt and Manage Credit Cards | Help Save My Dollars.com