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Home Publications Blogs Beat the Press Low Interest Rates and Optimism About the Economy Did Not Lure Homebuyers in December

Low Interest Rates and Optimism About the Economy Did Not Lure Homebuyers in December

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Friday, 21 January 2011 06:52

The Post reported on the better than expected numbers on existing home sales reported for December. It told readers that:

"Low interest rates, relatively affordable prices and tentative optimism about the economy helped lure buyers in December."

Actually, the data on existing home sales reports on closed sales in December. It generally takes 6-8 weeks between when a house contract is signed and when the sales are closed. This means that the December data reflect attitudes in October and early November, not December.

Comments (4)Add Comment
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written by PeonInChief, January 21, 2011 12:32
It also may reflect the large number of investors in the market. Real estate lawyers always end up working through Christmas to close deals that have to be done before the end of the year.
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written by Ugo Ubili, January 21, 2011 11:48
I agree with Dean.The December reported Home sales increased is not factual. All the closed deals in December took place in October and November.It happened that the book was closed in December.
Low interest rates influence home buyers?????
written by Ralph Musgrave, January 22, 2011 3:36
Whence the strange idea that interest rates have much influence on home buying? As any home buyer with their head screwed on knows, interest rates bob up and down. The period for which interest rates are low (or high) is normally short relative to the life of a mortgage. Thus “head screwed on” borrowers won’t be much influenced by current low rates.

The buyers who doubtless ARE influenced are the unsophisticated NINJA mortgage suckers. And we want loads more of them, don’t we?

If it’s official government policy that one of the objectives of low rates is to boost the housing market, I want to know who thought up this hair brained policy.
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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