Housing Recovery Momentum Derailed
Although no one expected a miraculous housing recovery considering that unemployment is stubbornly high, the consumer balance sheet still in repair mode, and credit conditions ignoble.
But the recent slump in housing is making some mortgage analysts uneasy about a recovery that many thought sustainable just a couple months ago.
As the Federal Reserve nears the end of a critical, year-long program to support the mortgage market, the “Housing is at a pivotal, ambiguous point,” says Ted Gayer, co-director of Economic Studies at the Brookings Institution.
Current mortgage activity has been heavily negative. And, even if some would like to attribute these low numbers to seasonal patterns the weakness is not what consumers nor experts expected.
Statistics show that new home sales fell to a record low in January, extending this two month slide. And both pending and existing home sales were down in the most recent month.
With the new HARP program renewed for 12 months, let’s hope that will help the economy and offset the end of the home buyer’s tax credit in April and the halting of security-backed mortgages by the Fed at the end of March.