The National Association of Realtors (NAR) was one of the prime movers behind the creation of the $8,000 first-time home buyer tax credit (the homebuilders’ association being the other prime mover).
The summer bust in home sales created by the program (and by NAR) is shaking people’s confidence in the entire U.S. housing market!
Freddie Mac expects 4 million new and existing home sales in the third quarter, a possible 20.7% decline from last year and 23% drop from the previous quarter.
In its September economic outlook, Freddie said recent reports of plummeting home sales and near record-high delinquencies has shaken confidence in the “fragile” housing recovery. After the homebuyer tax credit expired in April, the National Association of Realtors (NAR) reported existing home sales fell 27% in July, and new home sales have fallen to the lowest point since 1963.
The news will further weigh on the market. JPMorgan Chase analysts lowered expectations of housing recovery in the next four years. Jon Daurio, chief executive at the distressed loan purchaser Kondaur Captial, warned that home prices could fall another 20% as well.
Way to go NAR lobbyists!
Just because you have the power to run legislation through Congress doesn’t mean you should. But I bet it felt good to get your way and I bet it’s a top accomplishment on your job performance review.
“The main issue for the housing market outlook is how much of the recent weakness in home sales can be explained by transactions that were pulled forward by the credit ““ that is, ‘borrowed’ from sales in future months ““ versus signs that a more fundamental deterioration may be underway,” according to Freddie Mac.
I haven’t checked the numbers lately, but for Arizona I think the impact of the NAR Tax Credit Bust will be minimal after September.
Nevertheless, the NAR Tax Credit Bust energized the whole “double dip in housing” meme which will hurt the U.S. housing market beyond September.
NAR is part of the problem, not the solution.
(I wonder if the members of Congress have figured out yet that this whole NAR tax credit program was perfectly timed to provide the maximum damage to incumbents running for reelection. Hey, maybe NAR is brilliant after all!)