Wall Street ignored good economic data on housing today and instead, chose to focus on sovereign debt worries in Europe. Nevertheless, I wanted to take a moment to focus on continued gains in housing, compliments of the government’s tax credits for first time and existing home buyers.
The Pending Home Sales Index, which looks at contracts signed but not yet closed, increased 5.3% in March to 102.9, as buyers rushed to beat the impending deadline of April 30 – the date a contract is required.
Interest rates are low and the feds have sweetened the deal by providing extra cash. As the chart reveals, the incentive is working.
However, I suspect that sales will drop after the deadline. A more permanent fix to the housing problem requires job growth and stabilizing/rising home values.
When foreclosures fade and the unemployment rate falls, the stage will be set solid gains in housing sales.
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