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New Home sales dropped in September as buyers decided this may not be the time to purchase a new home. Single family homes sales were down nationwide by 3.6 percent.

What is interesting is that the National Association of Home Builders used the downturn as a call for Washington to increase the $8,000 new home buyers subsidy. Now I understand why, that is $8,000 more per home the government will give the builders towards the price of a home, or if we want to be technical, $8,000 that the home price does not need it to be lowered for the house to be priced right.

The inventory of new homes on the market continued downward for a 29th consecutive month, to 251,000 units in September. This is the lowest inventory since November 1982. However, the slower pace of sales kept the months’ supply unchanged, at 7.5.

Crowe noted that the Midwest, which unlike all other regions posted a significant gain in September home sales, was one area where buyers still had a last-minute opportunity to sign a deal in time to take advantage of the tax credit because of the lesser volume of sales in the pipeline.

On a regional basis, new-home sales were down 10 percent in the South, which is the nation’s largest housing market, and were down 10.6 percent in the West. The sales rate did not change in the Northeast in September, but gained 34 percent in the Midwest due to last-minute deals sparked by the tax credit.

Everyone keeps talking about a bottom forming, but how can that truly be if both interest rates and property values are both being stimulated by tax dollars. A bottom is when the market, not the government, decides it is. If the government does not have the confidence in the market that it has to throw money to keep the market from tanking, we do not have a bottom.

And until we have a true bottom, we are not going to have market that most people will feel comfortable buying into. We may stabilize the ship with these subsidies but we will never make it sail efficiently until we set it free.

Related posts:

1. Will Washington Extend the $8,000 Tax Credit
2. IRS Auditing 100,000 Home-Buyer Credit Recipients
3. Pulte Homes Says New Home Sales Will Increase When Foreclosures Slow Down
4. $15,000 Home Buyers Tax Credit Smoke And Mirrors
5. First Time Home Buyers Account For Nearly Half of Home Sales