More failed liberal economics: Home sales crater in May after tax credits expire

More evidence that government handouts can only artificially affect real market forces. First it was Cash-for-Clunkers, which only dragged in future demand, after which car sales dropped again. Then yesterday we learned that employment grew by 431,000, of which 411,000 were temporary Census jobs. Expect a big drop off when those jobs go bye-bye in July or August. Now we learn that as a result of the $8,000 government handouts for new home buyers going by the boards, and new home sales have, ever so predictably, tanked.

The withdrawal of federal tax credits for home buyers led to a steeper-than-expected plunge in May home sales in much of the U.S., as the housing market struggles to wean itself from government support.

Economists and real estate analysts expected home sales to slow after the tax credit, of as much as $8,000, expired at the end of April. But early data from real estate brokers indicate that the sales decline has been far more substantial than expected, with some markets showing declines of 25% to 30%. . . .

Some recent signs have been encouraging. In April, for instance, the government reported that new-home sales, spurred by the tax credit, jumped 48% from a year earlier to an annual rate of 504,000.

But Ivy Zelman, chief executive of Zelman & Associates, a research firm, estimates that sales of new homes nationwide in May were down 25% to 30% from April. She warns that the weak May performance increases the chances of renewed price cuts by builders caught with too much inventory.

Lawrence Yun, chief economist for the National Association of Realtors, estimated that contracts signed for home resales in May were down 20% to 30% from a year earlier. He expects June and July to remain fairly weak and will be watching nervously for signs of a rebound in August or September. “Housing cannot just depend on [government] stimulus forever,” Mr. Yun said.

Note the last line about not relying on government stimulus forever. Apparently the folks in Washington don’t feel the same way.

How many concrete examples do we need of failed liberal attempts to spend our way to prosperity? Like it or not, the only way to sell a car, a house, or get a real job is to let the market create them in response to an actual demand.

It’s called Capitalism.