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Home sales dip as uncertainty grows over taxes, spending

Is the 4-year housing boom coming to an end? That possibility has some worried as home sales fell more than expected in February and the Biden administration moves forward with a massive spending spree.  All this while mortgage rates rise.

On Monday the National Association of Realtors released a report stating that existing home sales experienced a drop that was 50 percent worse than expected.  The decline of a whopping 6.6 percent shocked economists polled by Reuters who forecast sales would only drop 3.0 percent.

In other polls, Americans expressed doubt about the economic future of the nation and that may be expressed in slower economic activity, depressing retail sales, production at factories and homebuilding.

Another study finds 7 in 10 Americans are concerned or worried about the economy in the years ahead.

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That is the conclusion of a study done by The Heldrich Center for Workforce Development, titled “Work Trends release, A Glass Half Full or Half Empty?.” The study also found more than half (52%) say that the future economy will not be better for the next generation.

When asked to rank major dangers to the future of the economy, the U.S. government is ranked by Americans as the number one threat to workers.

Economists say they expect massive fiscal stimulus spending along with warmer weather to increase a rebound when the March numbers come in.  But as the Biden administration begins to talk about massive tax increases to pay for the stimulus and a proposed $3 trillion infrastructure bill, many Americans are putting their stimulus in savings to prepare for an inevitable economic downturn.

Uncertainty over public policy coming out of Washington is driving rising mortgage rates. The 30-year fixed-rate mortgage has risen to a nine-month high of 3.09 percent, according to data from mortgage finance agency Freddie Mac. The sustained increase since February will make homeownership more expensive for first-time buyers.

Before the 2020 election John Weicher, director of the Center for Housing and Financial Markets at the Hudson Institute, spoke to Realtor.com about the legacy of the Trump administration on housing.

Under Trump, both home sales and the homeownership rate skyrocketed to their highest rate since 2008.

“In the last four years the homeownership rate has been going up, finally,” Weicher stated of Trump who realized the importance that housing played in the economy. It was part of Trump’s “strategy to rebuild the economy in the aftermath of the Great Recession, and it’s paid off.”

According to the Realtor organization, the Biden administration is planning to subsidize renters. The controversial plan “would offer low-income renters a tax credit designed so they pay only up to 30% of their income on housing and utilities.”

–Dwight Widaman and wire services