Home sales in freefall

The floor has fallen out from underneath the housing market in the

months since the homebuyer tax credit expired in April. In July, total home sales

fell by 26% m/m, to a level not seen in 17 years. Of course,

this was largely due to purchases being brought forward from the summer

months into the spring. And the 5.2% m/m rebound in the pending home sales

index in July suggests that the post-tax credit floor in sales may have been

reached. But demand towards the start of the home-buying pipeline has

remained weak. Even the fall in mortgage rates to new record lows has done little

to boost mortgage applications for home purchase.