The Homebuyer‘s Tax Credit officially expired on April 30th. Over the last few weeks, we’ve started to get a sense of the impact on the housing market without this government support from some of the latest housing data, and the evidence is troubling. Below is a list of some of the latest developments:
- The National Association of Home Builders’ monthly Housing Market Index fell to 17 in June, from 22 in May. Consensus expectations were for a much milder decline to 21.
- The Mortgage Bankers Association’s weekly index of applications for new mortgages has plunged -38% since the end of April
- Housing Starts in May fell to a 593,000 annual rate, from a 659,000 pace in April
- Likewise, Building Permits fell to a 574,000 annual pace, from 610,000 in April
All of this has happened in an environment of improved affordability for consumers – house prices are down significantly from their highs of a few years ago, and mortgage rates are back below 5%. We weren’t anticipating that the housing market would come roaring back, but there were increasing signs that it might be forming some sort of bottom. Instead, the latest batch of reports has created a fresh round of concern about how the housing market will fare going forward without government assistance.