New Home Sales Plunge After Tax Credit Expiration – Must be a Coincidence

In an unexpected turn of events, the US housing market which was seeing an unusual revival over the past several months saw a horrific drop in the month of May.

Sales were projected to drop 19 percent to a 410,000 annual pace, according to the median estimate of 76 economists surveyed. Forecasts ranged from 300,000 to 530,000. The government revised April’s purchase rate down to 446,000 from a previously reported 504,000.

The median price decreased 9.6 percent from the same month last year, to $200,900, the lowest since December 2003, today’s report showed.

Purchases dropped in all four U.S. regions last month, led by a record 53 percent decrease in the West. (Business Week)

So let me see here, people are not buying as many houses as they were a few months ago? I wonder if the expiration of the $8000 tax credit had anything to do with it. But that’s probably not the case, otherwise we might also have to worry about the banks and carmakers who got their own version of the ‘tax credit’ in the form of stimulus funds.