Home sales were down in January, another sign that the housing market may not be recovering as quickly as many had hoped. Sales of previously owned homes fell by 7.2 percent bringing the number of homes sold to its lowest level since summer.
“Most of the improvement that we’ve seen in housing over the past year has been tied to some sort of stimulus program,” said Wells Fargo economist Mark Vitner. “Now that we’re seeing those programs wind down we’re seeing that housing is quite a bit weaker than many people had thought.”
The latest report of sluggish home sales is yet another sign that many buyers are not feeling confident enough to make an investment in a home. According to many analysts, one of the leading causes of consumer hesitation is the high unemployment rate and the fact that job losses have not reduced significantly. Many consumers fear that they will not be able to maintain the mortgage payments on a new home and that they may face a job loss and/or eventually face foreclosure because of some unforeseen crisis. But this newfound caution may not be such a bad thing for the foreclosure crisis. One of the biggest concerns surrounding the stimulus program that pushed many new homebuyers to make the leap is that those new buyers may not be fully prepared for the responsibilities homeownership brings. Homebuyers who were dependent on the stimulus program to make down payments are most vulnerable to foreclosure in the future. Also, the current level of job losses is an ever present reality. More future job losses may be on the horizon which will make more people vulnerable to foreclosure. Potential homebuyers are wise to move cautiously in this environment, especially since none of our foreclosure prevention programs effectively prevent home foreclosure that is caused primarily by a job loss.