The report reflects a sharp drop in demand after buyers stopped scrambling to qualify for a tax credit of up to $8,000 for first-time homeowners. It had been due to expire on Nov. 30. But Congress extended the deadline until April 30 and expanded it with a new $6,500 credit for existing homeowners who move.
The big question hanging over the housing market this spring is whether a tentative recovery will stumble after the government pulls back support. The Federal Reserve's $1.25 trillion program to push down mortgage rates is scheduled to expire at the end of March -- a month before the newly extended tax credit runs out.
When reality fails to meet spin-induced expectations, programs will be extended, and quite possibly augmented for the the good of all. Of course, no one will critically review the effectiveness the programs being extended beyond the standard response wer're better off than if we hadn't done this.
This inevitably leads me to think of the Jesse Livermore quote,
All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis.
Source: finance.yahoo.com
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