Fed: Softer Recovery May Need Further ‘Policy Stimulus’

A “softer” economic recovery prompted Federal Reserve officials to discuss the possibility of “further policy stimulus” at last month’s monetary policy meeting, according to minutes released by the Fed today. Fed officials raised such a scenario as a result of persistent unemployment, modest income growth, tight credit and a housing market regressing after the expiration of homebuyer tax credits.

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Tax Credit Effect: Housing Starts Surge, But Permits Dive

Housing starts registered a bigger-than-expected jump in April – the highest level in 18 months – but construction permits saw a big drop and that may signal a summer dip in activity for the fragile housing market. The April figures from the Commerce Department reflect somewhat on the impact of the homebuyer tax credits, which offered up to $8,000 but expired April 30.

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Expiring Tax Credits Spur More Slashing of Home Prices

About 22 percent of listings on the market as of May 1 have seen at least one price reduction, representing a 10 percent increase in the quantity of reduced-price homes in April, when homebuyer tax credits were set to expire, according to Trulia.com. Twelve of the top 50 cities across the United States saw price reduction levels at 30 percent or more in April, compared to just five cities in the previous month.

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Tax Credits & Surging Home Sales: What Happens After April 30?

The major housing indicators agree that the homebuyer tax credits – extended and expanded late last year – finally kicked in last month as new home sales soared 27 percent for March, a month over month rate not seen since 1963. The Commerce Department reported yesterday that new-home sales jumped to a seasonally adjusted annual rate of 411,000, reversing February’s record low and blowing past expectations of most housing industry analysts.

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Homebuyer Tax Credits Boost Sales 6.8% in March

Tax credits expanded late last year for first-time and repeat buyers are finally having a substantial effect on existing home sales, which registered 5.35 million units in March, up 6.8 percent from February – and a 16.1 percent increase compared to a year ago. The figures from the National Association of Realtors represent the first sign that the tax credits, which expire April 30, have swayed the housing market.

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