The U.S. Commerce Department last night reported sales of new homes sunk 33 percent in May to the lowest level since records began in 1963.
The May collapse is also the biggest monthly drop on record and follows the end of federal tax credits used to prop up the unsustainable housing market.
» New-home sales plunge 33 pct with tax credits gone – Yahoo, 23rd July 2010.
But the recession is over! Why are sales dropping? 😛
The article states:
“The government offered an $8,000 credit for first-time buyers. Current homeowners who buy and move into another property could receive up to $6,500.”
The Government took away the incentive that brought forward many potential investors.
Given that real estate makes up 10% of US GDP, this dismal housing result could mean that the US might falling into a double dip recession.
It begs the question what will be the effect of the first home buyers grant in Austrlia going to be on Australia housing bubble…