Mark Zandi, chief economist at Moody’s Economy.com is one of many experts who think the recent rebound in housing won’t last.
“I don’t think the housing crisis is over,” Zandi told Bloomberg. “I think we’re going to see another leg down.”
Home prices and sales volume showed some gains in spring and summer. But experts attribute much of that recovery to the $8,000 tax credit for first-time homebuyers.
“The first-time homebuyer tax credit juiced up sales,” Zandi said.
“The stimulus was helpful. It augurs, at the very least, that policy makers can’t pull life support from housing.”
But already, home starts plunged 10.6 percent in October from September to the lowest level in six months.
Surging unemployment, now 10.2 percent, doesn’t augur well for housing either.
“The thing that drives our business the most is job creation,” Donald Tomnitz, CEO of D.R. Horton, the nation’s second largest homebuilder, said on an earnings conference call.
“If we look at the macroeconomic environment, it’s not good for us.”
While GDP rose 3.5 percent in the third quarter, “you don’t pay a mortgage with economic output: you pay a mortgage with a paycheck,” Jay Brinkmann, chief economist of the Mortgage Bankers Association, told Bloomberg.
Others are pessimistic too.
"Builder confidence remains near its all-time lows, and few firms note any improvement in buyer traffic," Wells Fargo senior economist Mark Vitner wrote in a note to clients.
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