Thursday, July 22, 2010

Did the Housing Credit Attract New Buyers?

At least one noted economist doesn’t believe that the home buyer tax credit brought new buyers into the market.

Milton Ezrati, a senior economist and market strategist at Lord Abbett, argues that the credit only encouraged buyers to rethink their timing.

“People who were looking crowded their purchases into March and April in order to qualify for the credit, driving up home sales by almost 30 percent.” Ezrati writes in the Wall Street Journal. “Then, because so many of those sales would have occurred after April, recorded sales fell suddenly by about 30 percent in May. Housing starts and residential construction put in place followed this same up-and-down pattern.”

Source: The Wall Street Journal, Emily Peck (07/19/2010)