Housing Sales Real?

“Existing-home sales have increased for fourth month in a row, as a combination of historically low rates, first-time home buyer $8,000 tax credit, and foreclosure pummeled prices have combined to move some inventory.

Existing-home sales rose 7.2% from June, and more importantly, gained 5.0% from July 2008.The bottom line is this is an improving, but heavily government subsidized (Tax credits, ZIRP) data point.”

- Barry Ritholtz, The Big Picture

As Ritholtz states above, the subsidy is a contributing to the rise in home sales. I’m not sure why the connection between increases in home sales and a government subsidy isn’t exactly like the Cash for Clunkers program, which ends Monday evening. We might get an idea of what will happen to the housing market once the subsidies end by what happens when the cash for clunkers program ends. Will the demand fall off a cliff? Probably…