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The Wall Street Journal provides more proof that the $8,000 Housing Tax Credit worked:

The housing-market boost driven by government home-buyer tax credits has faded, damping builders’ incentives to construct new homes in May. Meanwhile, U.S. industrial production strengthened as a key inflation indicator remained tame in the face of a sluggish recovery. U.S. housing starts plunged by 10% to a seasonally adjusted annual rate of 593,000 in May, the month after the government ended its home-buyer tax credit.

Single-family housing starts slid 17.2% to an annual rate of 468,000, the lowest level in a year. Permits for new construction also declined, the Commerce Department said. “The plunge in housing starts in May underlines that a sustained housing rebound has yet to get under way,” said Nigel Gault, chief U.S. economist for IHS Global Insight. “Now the credit is gone, it’s time for the payback.”

The decrease in May starts confirmed fears that a fitful recovery could falter with the April 30 end of a tax credit created early last year for first-time home buyers. The tax relief spurred sales and construction. Even though prices and mortgage rates are low, the job market is weak. “Starts should be soaring at this point of the business cycle,” said Ken Mayland, president of ClearView Economics.

But builders are having trouble getting financing, and many buyers are looking to existing homes instead of new homes. Existing homes are cheaper than newly built homes—even more so with the foreclosures that drove down prices. Builders are also cautious about a surplus of unsold homes, including a so-called shadow inventory made up of property withheld from the market because of low prices. When prices climb enough, that inventory will flow into the market.

Still, even though single-family housing starts dropped sharply in May, apartment construction rose. Apartment construction—housing with two or more units—rose 33% to an annual rate of 125,000. Within that multifamily category, groundbreakings of homes with five or more units were up by 38.3%.

From Bloomberg Business Week:

In the first quarter, the Boston area had the second-largest home price increase (6 percent) among the 50 metros surveyed, according to CoreLogic data. A report by the Concord Group, a real estate consultancy, projects recovery (or sustainable home sales and price appreciation) in the metro Boston housing market in late 2011, ahead of other areas. Boston, supported by a strong education sector, was hit earlier and less severely by the housing crisis than other places, and the unemployment rate here has stayed below the national average.

Does anyone have any personal stories out there to back up this report?  It seems that reports like this and this might contradict the Concord Group’s rosy findings.  So, while mortgage rates may be at historically low levels, pessimism from industry leaders, consumers, and home builders has the potential to stall Boston’s housing recovery.  Still, being #2 is not that bad.  Unless your the Celtics.  Live Proper.

Rates on 30-year fixed mortgages fell this week to the lowest level of the year and were barely shy of the record low. The mortgage finance company Freddie Mac said the average rate sank to 4.72 percent, down from 4.79 percent last week. It was just above the record of 4.71, set in December.

The average rate on a 15-year, fixed-rate mortgage hit 4.17 percent, down from 4.2 percent last week and the lowest on records dating back to 1991. Though mortgage rates are at attractive levels, the housing market has not benefited. The number of customers applying for a mortgage fell to the lowest level in 13 years last week and was down 35 percent from a month ago, according to the Mortgage Bankers Association.

That’s a sign the market is struggling without the tax credit of up to $8,000 for first-time buyers, which expired at the end of April. Freddie Mac collects mortgage rates Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Rates on five-year, adjustable-rate mortgages averaged 3.92 percent, down from 3.94 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 3.91 percent, from 3.95 percent. That was the lowest average since May 2004.

From this article. Three cheers for Congress if they can get another tax credit passed.  I think that will strongly encourage potential home and condo buyers to lock in these historically low mortgage rates.  Right now, there is a lot of uncertainty in the economy as a whole, and any effort by federal, state, and local governments to improve consumer confidence will go a long way.  Other than passing another $8,000 tax credit, do you think there are any other programs that could be developed to aid the home buyer?