May 31, 2010
OH, GOODY: Home Sales Set to Plummet in Markets Hit Hard by Foreclosures. “A sample of subdivisions in both cities showed sales contracts for new homes ‘pulled back sharply in May and contract cancellations spiked,’ Houston-based Metrostudy said in an e-mail. Would-be buyers canceled about 40 percent of new home contracts in San Diego in May, up from 10 percent in April, the company said. Data on new signings in that city weren’t immediately available. Sales indicators fell after April 30, the last day for homebuyers to sign contracts in time for a federal tax credit of as much as $8,000 for first-time purchases and $6,500 for certain ‘move-up’ buyers. The deadline may have hurried customers to snap up properties when they otherwise would have waited, said Brad Hunter, chief economist based in Palm Beach Gardens, Florida, for Metrostudy.” As with the cash-for-clunkers debacle, this basically seemed to involve a sort of borrowing against future sales. You get a bit more activity now, at the cost of less activity later.