Home sales plummet on tax-credit end

Just as we saw with cash-for-clunkers, the boost to the housing market from the homebuyer tax credit was only temporary:

The number of contracts to purchase previously owned houses plunged in May by more than twice as much as forecast after a homebuyer tax credit expired.

The index of pending home resales dropped 30 percent from the prior month, figures from the National Association of Realtors showed today in Washington. The drop was the biggest in records dating to 2001 and compared with a 14 percent decrease forecast in a Bloomberg News survey of economists.

Our Democratic overlords persist in this idea that the economy suffers due to people making systematic errors, and that they can get industries moving better if only they goose them a little. It never works.

But we can say one thing about the homebuyer tax credit: unlike cash-for-clunkers, at least homebuyers didn’t have to burn down their own house to qualify.

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