Most analysts expected housing might hit a rough patch after the home-buyer tax credit expired in April. But is the plunge in demand becoming worse than expected?It’s a fair question, given Wednesday’s report that new home sales plunged 33% in May from April and were off 18% from one year ago.Moreover, the Mortgage Bankers Association reported that mortgage rates fell again, down to 4.75% last week from 4.82% two weeks ago. By comparison, rates were slightly higher one year ago, at around 5.3%.Yet demand for refinancing or for taking out new loans is tepid. The index that tracks new purchase-loan activity was down 2.3% from last week and nearly 37% from one year ago.That weakness is also showing up in home sales contracts signed in May, which the National Association of Realtors estimates is down 10% to 15% from one year earlier. Those deals won’t close until later this summer, which means that we could be in for several more months of gloomy housing indicators.
By Nick Timiraos, June 23, 2010 WSJ

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