Subsidizing renters with gobs of greenbacks if they buy a house turns out to be a pretty popular program.
Thanks to the tax credit for first-time home buyers, as well as cheaper home prices and lower mortgage rates, existing home sales increased by 9.4% to a 5.57 million annual rate in September, the National Association of Realtors said Friday.
Sales had been forecast to rise to an annual rate of 5.35 million, according to economists surveyed by Thomson Reuters.
First-time home buyers, many of whom certainly owe you and every other taxpayer a thank-you card, rushed in to take advantage of the program.
The question, though, is what happens after the program expires in November?
Patrick Newport, US economist at IHS Global Insight, notes that the government’s home-buyer tax credit, like Cash for Clunkers, simply shifts sales from one period to another, but it doesn’t do much to heal the housing market.
“The report might, on the surface, look to be really good,” Newport tells us. “But, if you think about it more carefully, it’s really not great news. We are just trading off good news now for bad news in 2010.”