After 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."
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