The number of pending home sales plummeted by 16 percent in November, sparking fears that the real estate market could be heading for another fall after showing signs of stabilizing. "We thought it would drop 2 percent," Jennifer Lee of BMO Capital Markets told The New York Times. "When you see 16 percent, the first thing you say is, what the heck happened here?" Mortgage rates are rising, discouraging buyers. And, with a quarter of homeowners owing more than their houses are worth, fresh foreclosures could add to supply glut and drive prices down further. Is your house about to lose more value?
Prices could be headed for another fall: The home-buyer tax credit, which expires in April, might boost sales in early 2010, says David Indiviglio in The Atlantic. But "2010 will likely see significant increases in mortgage rates, which will deter some potential homeowners." If the pool of buyers dries up, "we might see housing inventory begin to increase again significantly as foreclosures continue, and prices could plateau — or even erase their 2009 gains."
"Pending home sales plummet"
Don't panic. Sales will bounce back: Since the period covered in this home-sales report, says housing analyst Michael Larson of Weiss Research, quoted in the Los Angeles Times, home-buyer tax credits have been expanded and extended, the jobs picture has brightened, and the economy has started growing again. "So after we work through this period of housing indigestion, we'll likely see sales rates gradually pick up again" in late spring.
"November pending home sales index tumbles"
The housing market won't get better any time soon: The good news is that the housing market may have "found a bottom," says Bryan Banish in Seeking Alpha. The government seems ready to do whatever it takes to "fight against another leg down," although government programs have to end some day. So it's up to buyers to drive the market higher, and, with mortgage rates rising and foreclosures still looming, they won't be able to do that for a long time.
"What's next for the U.S. housing market?"
A real stimulus would help: This just proves how wrongheaded the Obama administration's stimulus was, says Ed Morrissey in Hot Air. It just encouraged people who already intended to buy to do so earlier so they could grab the extra cash. "The best way to stimulate housing sales will be to create jobs and wealth in the marketplace. That may not be as 'sexy' as a tax credit, but it will be far more effective" at increasing sales and sending prices back up.
"Home sales fall 16% in November"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Obama just kneecapped Jeb Bush and Chris Christie's 2016 prospects
- It's official: The religious right is calling it quits
- 6 tiny scientific mistakes that created huge disasters
- 43 TV shows to watch in 2014
- 10 classic Sesame Street moments we wouldn't show today's kids
- The dangerously childish morality of liberal ObamaCare supporters
- What could happen if the Supreme Court rules against ObamaCare
- The myth of the stay-at-home dad
- The Hunger Games: Mockingjay — Part 1: 10 major differences between the book and the movie
- Uber, and the growing threat of corporate surveillance
Subscribe to the Week