Economic Commentary: Varying Signs

These last few months saw a “pause” in housing market activity following the rush of buyers to qualify for the tax credit. That pause was anticipated – and is still occurring. Contract signings on existing homes fell 3 percent in June; that on top of the 30 percent tumble in May. July data is still being collected; unfortunately the raw data coming are not encouraging and could be similarly low. The pause, we hope, will not extend into the autumn months. If it does, home prices could indeed take another tumble down after essentially stabilizing over the past 18 months. Others are certainly taking note. The former Fed chairman, Alan Greenspan, said on one recent Sunday morning “talking head” show that the broader economy will surely go into another recession if home values were to fall. Meanwhile, the current Fed chair, Ben Bernanke, spoke of an ‘unusually uncertain’ economic outlook.

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