How Low can they Go…

Cliff Peskin

June 23 2010

New-home sales in the United States have plunged 33 percent to their lowest level on record after federal homebuyer tax credits end.

According to a US Commerce Department report, sales of new homes collapsed in May. Its the first indication that the end of federal tax credits will markedly affect the nation’s housing market. Purchasers who were aiming to qualify for the credits would have had to sign a purchase contract by April 30, 2010.

A U.S. economist with Capital Economics wrote, “We fear that the appetite to buy a home has disappeared alongside the tax credit. After all, unemployment remains high, job security is low and credit conditions are tight.”

According to the report, sales of new single-family houses in May 2010 were at a seasonally adjusted annual rate of 300,000. This is 32.7 percent (±9.9%) below the revised April rate of 446,000 and is 18.3 percent (±13.0%) below the May 2009 estimate of 367,000.

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