An article from the Associate Press on Yahoo.com (Stocks slide on new concerns about housing, banks
) stated that the National Association of Realtors data showed existing home sales fell 2.2% in May and that they were surprised. Surprised? What is surprising about this?
So the Government hands out a bribe of $8,000 to entice you to buy a home. The effect for that credit is to bring in homebuyers that were on the fence; marginal buyers who might otherwise have waited but the bribe was too good to pass up. When you offer such a bribe, the result is leaving a vacuum of demand in the future becuase you have already pulled the future buyers into the present. No wonder that home sales have declined now that the credit expired.
You could see this one coming the minute they offered the credit yet analysts are going to claim to be "surprised" because thought sales would go up? Sales did go up initially however it does not seem unexpected that sales in the month AFTER the credit expired would drop. Even for the home that had to close by June 30 to get the credit, the buyers too close to the end of the April deadline probably just decided to wait hence we see sales decline.