fter a record drop in home sales in May, builders' confidence in the housing market has sunk to its lowest level since the recession began. The expiration of the government's home-buyer tax credit — a key element of the economic stimulus program — has contributed to the slump in sales. Does this mean the housing industry is in for another crash? (Watch a Fox Business report about declining home sales)
All the homebuyer credit did was delay the reckoning: The tax credit was supposed to spark a wave of buying and "sop up" excess housing inventory to keep the industry afloat until the economy recovered, say the editors of The Economist. Instead, all it did was spark a flurry of buying that quickly petered out because the labor market "remains in the doldrums." That means the housing market will remain bleak "for the foreseeable future."
"Bringing the housing down"
Not necessarily. Some signs are hopeful: The news isn't all gloomy, says Reuters' Lucia Mutakani via ABC News. Applications for building permits unexpectedly inched upward in May, suggesting there's improvement on the horizon. And industry analysts say that we could be "close to finding a bottom in the aftermath of the tax credit." That doesn't mean happy days are here again, but it's something.
"Housing starts fall, permits offer ray of hope"
It's the jobs, stupid: This isn't just a disaster for people trying to sell homes, says David Indiviglio at The Atlantic. "This is pretty bad news for construction jobs," which are down 28 percent to 2.14 million since their 2006 peak. Residential construction jobs alone are down by nearly 43 percent — that's 600,000 jobs — since their peak. And with home builders bracing for a long dry spell, those jobs won't be back soon, which will only slow the recovery.
"Home builders see demand further weaken"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- What would a U.S.-Russia war look like
- The Daily Show has some fun mocking the CPAC power players
- What would a U.S.-Russia war look like?
- Here's proof that Justin Bieber is just as spoiled as you always thought
- Watch Zach Galifianakis get annoyed at President Obama on Between Two Ferns
- Why I'm sick and tired of seeing naked women on HBO
- 10 things you need to know today: March 11, 2014
- Why Ted Cruz is the real-life Frank Underwood
- Why is it so expensive to build a bridge in America?
- What the collapse of the Ming Dynasty can tell us about American decline
Subscribe to the Week