10.07.2009 Policy Points

Housing Market Overview

From the latest issue of the Center for Economic and Policy Research’s Housing Market Monitor:

Whether or not the [first-time homebuyer tax]credit is extended, the outlook for the market in the near future is almost certain to darken. The number of mortgage delinquencies continues to rise. With the economy continuing to lose jobs and many homeowners having exhausted their savings and their unemployment benefits, there will certainly be more distressed sales in the future. In addition, it seems unlikely that interest rates will remain at the extraordinarily low levels that they have been at in recent months. We are approaching the end of the period in which the Fed has committed to buy mortgage-backed securities, so unless they extend their purchases, mortgage rates will almost certainly be rising in the next few months. In short, there are many factors suggesting that the housing market will weaken with more supply and weakened demand. There is really nothing pointing in the opposite direction.

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