The drop in buying plans points to the risk that the recent stabilization in housing will unravel without government help. In a bid to sustain the recovery, Congress passed and the administration signed a bill last week to extend jobless benefits and incentives for first-time homebuyers, adding a provision that also made funds available to current owners.
This article and this trend indicate that the government considers it to be a problem when buying returns to levels from the year 2000. I remember 2000, and the economy, including the real estate market, did not seem to be in desparate shape at that time. Yet sales at only the year-2000 level seem to be insufficient to avoid dire economic consequences.
This is one of the characteristics of an inflationary era. Economic activity that is sufficient to maintain prosperity for a short time will not be sufficient without substantial increases. In this case, continued government stimulus is necessary to push real estate sales to higher and higher volumes just for the purpose of avoiding the return of 2000 levels. The stimulus acts like a narcotic, and previous levels are never enough.
Inflation may not always be reflected in prices, but it is reflected in trends found at the crossroads of economic output and government stimulus.