Existing Home Sales-Bad, New Home Sales-Even Worse

All eyes were on this week's release of home sales data, which were expected to prove that the expiration of the tax credit wouldn't be a catastrophe for the housing market. Turns out that our overly optimistic band of economists were wrong yet again. As yesterday's data showed, existing home sales were down, instead of up. Today's reported new home sales numbers were much worse than expected and were the lowest level ever recorded. New homes sales plunged 33% to an annual pace of 300,000 last month from April. Also, the median dropped 9.6% from the same month last year to $200,900.

Clearly the tax credit merely shuffled housing demand around, moving it forward, rather than stimulating new demand, which most people with a brain understood from the get go. Our congressmen are far too beholden to the NAR and homebuilder lobby to do any critical thinking on their own. So they fell for the whole "we need this credit to boost the economy" line. Nice to know that our tax dollars were spent to give a bunch of people money to buy houses that they would've bought anyway. Oh well, the money was spent, so not much we can do now, except, of course, introduce even more legislation to get people to buy vacation homes.

According to Bloomberg, the housing market will now be "dependent on gains in employment." With unemployment hovering near double digits, it's not looking good for a robust housing recovery. Double dip anyone?