| Sales of previously occupied homes soared in April | | | | December. But, thanks to investor concern over the |
| thanks to the now-expired federal tax credits and near | | | | European crisis, the climb in interest rates was held off |
| record low mortgage rates. Economist almost | | | | temporarily. Homeowners with adjustable-rate |
| unanimously agree the rise will be short-lived. The tax | | | | mortgages, however, will see slightly higher rates. |
| credits expired, and with all the other issues facing the | | | | About 7 out of ten ARM loans reset based on the |
| US economy, low interest rates alone will not be | | | | London Interbank Offered rate, which large international |
| enough for the housing market to make a full | | | | banks use when lending to each other. This rate has |
| recovery. The combination of strict lending standards, | | | | been climbing in response to the European crisis, |
| heavy consumer debt, and record unemployment will | | | | though it remains well below where it was last year. |
| most likely drive demand down. | | | | In a healthy economy, the low rates would drive up |
| Previously owned home sales climbed more than 7 | | | | demand in the housing market, but such a rise has |
| percent in April to a seasonally adjusted annual rate of | | | | been stifled by a weak job market and tight lending |
| 5.76 million. The increase in sales also boosted prices, | | | | standards. The impact of the tax credit is expected to |
| with the median price for new homes climbing to | | | | stick around for a bit as homeowners were required |
| $173,000, about a 4 percent jump from April 2009. | | | | to sign an agreement by April 31st and close by June |
| Interest rates fell last week to their lowest level this | | | | 1st to qualify. The current pace of home sales is 20 |
| year, and almost reached the record-low set last | | | | percent below the peak set in September 2005, but |
| December. Economists cite the current debt crisis in | | | | more than 25 percent above the record low set at the |
| Europe as a major cause, as investors wary of | | | | beginning of last year. The big question is how the |
| stocks have invested in Treasury bonds, whose yields | | | | market will respond to the tax credits expiring. With the |
| determine interest rates for 30 year fixed rate | | | | near-record number of homes currently on the market, |
| mortgages. | | | | a questionable job market moving forward, and banks |
| Rates had been expected to rise after the expiration | | | | ready to put thousands more foreclosed properties on |
| of the Federal Reserve's mortgage purchasing | | | | the market, the outlook for the housing sector is very |
| program that helped rates reach a historic low in | | | | shaky. |