The always overly enthusiastic National Association of Realtors has reported that sales of existing homes were up 10.1 % in Oct.

This is good news, even if it was predominately first-time buyers taking advantage of a special tax credit. See previous blog post.

There are even “reports of bidding wars” although they did not mention where those wars were occurring.

The $8000 tax credit has been extended has been extended until spring. And it was expanded to include more buyers. Will this be enough to spark the economic recovery?

Probably not. Foreclosures are rising, jobs are disappearing, construction of new homes was way off in October and people are (obviously) not spending as much – even as we head toward Black Friday.

The extension of the homebuyer tax credit will help the housing market next year and the overall economy will benefit slightly from higher home sales.

But the biggest contribution the housing industry makes to economic growth is from homebuilding. And it’s just not happening.

The government, that has an uncanny ability to botch up everything they get involved in, may have actually helped the housing market. The question is, what will happen to the markets when all of the subsidized buying and lending props are eliminated? There was an excellent article in the Wall Street Journal yesterday that addresses this.

http://online.wsj.com/article/SB10001424052748704576204574529810440815176.html