Housing Activity Slowdown Continues to Plague US Markets

Despite President Obama’s housing and mortgage programs to help the distressed, the activity in the sector continues to witness a slowdown in recent weeks. The first time homebuyer credit program launched earlier in the year to help the housing sector out of the recession was expected to increase the investment activity. Significant tax advantages were offered under this program to home buyers. However, the program has not delivered results as per the expectations.

Housing stats witnessed a decline over the previous two months of the year. While February figures were worse than those recorded in January, analysts believed that it was the bad weather, which was undermining the impetus provided by the program incentives. However, as March figures has also shown no marked improvement, the weather can no longer be blamed for the sluggish housing activity across the US.

Building permits have also recorded a fall over the same period. As permits are less influenced by bad weather, the decline here shows a definite slowdown in activity. The slowdown comes even as the first time homebuyer credit program is being widely publicized on media to maximize coverage and reach.

The government is making desperate efforts to shore up the markets with modifications to existing housing programs and launch of new incentives to include repeat home buyers but these are yet to show concrete results reflected as improvement in the housing market. June is the deadline for deal closures to qualify for the first time buyer benefits and this was a major reason why experts expected a massive surge in activity in March, April and May. The government has also come up with modifications to the Making Homes Affordable program in a bid to help owners avoid foreclosures and retain ownership of their homes. But all these efforts are yet to bear fruit.

As a strong housing segment sets the stage for a sound economy, the government is still keen on boosting the performance of this key area. With interest rates falling to attractive lows on mortgages, refinance options are being promoted as a means to reduce recurring mortgage payment burdens.

A recent housing market report from Fannie Mae confirmed that in spite of consistent efforts by the administration, there does not appear to be adequate improvement in this sector. The report states that the first time home buyer credit program is not meeting expectations because of the severely restricted number of persons qualifying for its benefits.

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