Home Sales And Government Incentives
Markets ended lower despite existing home sales data (thanks to tax credit and seasonal adjustment looking exceptionally good) which came at 5.57 million at annual rate vs. 5.35 consensus and 5.1 in August. Blomberg story: U.S. Economy: Existing Home Sales Surge on Rush for Tax Credit. Median home price fell 1.4% on monthly level despite reduced share of distressed sale of 29% versus 50% levels earlier this year. The question here is weather we will see cash-for-clunkers winding down effect here or extension of the program. My guess is extension of some kind.
Barron’s tried to shed some light on the costs of running such a program. Barron’s story: Homebuyers’ Handout — Worse Than Cash for Clunkers. The math is: every additional sale under $8,000 first-time homebuyers’ tax credit actually costs the government $43,000; possible one-year $15,000 tax credit would cost $292,000 per additional sale.
China’s yesterday GDP growth figure spurred a lot of attention, most of it questioning the trustworthiness of China’s statistics. Most notable article by Forbes. Forbes link: China’s 8.9% Growth? No Way.