For anyone who argues the relevance of government stimulus on housing recovery, I submit the following.
One third of all home buyers in the past several months have taken advantage of the $8000 home buyer tax credit.
In the new construction market, builders say the credit has been instrumental in boosting sales as well as confidence among builders.
Since the start of the credit, the builder sentiment survey has gone from a record low in January to a steady gain three months running.
But this month, one of the three components of the survey, the "sales expectations" part that gauges potential over the next six months, slipped.
“Builders are seeing some improvement in buyer demand as a result of the first-time home buyer tax credit, and low mortgage rates and strong housing affordability have also helped to revive some optimism,” noted Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. “However, the window is now basically closed for being able to start a new home that can be completed in time for buyers to take advantage of the tax credit before it expires at the end of November, and builders are concerned about what will keep the market moving once the credit is gone. Congress needs to act now to keep the credit from expiring just as its intended effect on buyer demand is starting to materialize.”
In addition to the tax credit, the housing market has arguably been juiced by government induced low mortgage rates. By buying up Fannie Mae and Freddie Mac mortgage-backed securities, the government has pushed the 30-year fixed to near record lows, recently at 5.02 percent and now around 5.08 percent. That has pushed the refinance share of activity to 61 percent of all mortgage application volume, according to today's Mortgage Bankers Association weekly mortgage survey.