Bucking The Real Estate Trend-Waynesville and Maggie Valley Real Estate

Double-dip?

WASHINGTON – The number of people preparing to buy a home fell sharply in November, an unsettling new sign that the housing market may be headed for a “double-dip” downturn over the winter.

The figures Tuesday came after a similarly discouraging report on new home sales, illustrating how heavily the housing market depends right now on government help.

In October, buyers raced to get contracts signed in time to take advantage of a tax credit for first-time homeowners that was set to expire. It has since been extended into spring — and now prospective buyers are taking their time.

The National Association of Realtors said its seasonally adjusted index of sales contracts fell 16 percent from October to November, ending nine months of gains. Economists surveyed by Thomson Reuters had expected only a 2 percent drop.

“This was bound to happen at some point, although not by this much,” wrote Jennifer Lee, senior economist with BMO Capital Markets. She added: “Gulp.”

When the tax credit expires this spring and the government phases out programs to keep mortgage rates low, the housing market will have to stand on its own. Many economists doubt it can.

“We’re just going to languish at the bottom,” said Anna Piretti, senior economist at BNP Paribas.

The last housing downturn helped drag the nation into the worst recession in decades. The expected dip in home sales and prices this winter appears to pose less of a threat to the broader economy.

Orders to U.S. factories, for example, posted a big gain in November, the Commerce Department said Tuesday. So while the housing market remains vulnerable, makers of steel, computers and chemicals are mounting a surprisingly robust rebound.

“We expect housing to just limp along even as the rest of the economy is growing fairly strongly,” said Nomura Securities economist Zach Pandl.

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AP Economics Writer Martin Crutsinger contributed to this report.