Firm Says U.S. Housing Double-Dip Has Begun

Toronto, Ontario, Canada, July 15, 2010--Capital Economics of Toronto said that a double-dip in the U.S. housing market has likely begun.

The economic firm's report also found that for every home currently on the market, there are two homes waiting to be sold.

The Capital Economics report, titled "Double Dip Begins," argues that the rush to take advantage of the federal tax credit pushed new home sales up by 29% in the two months to April. But in May, new sales plunged by 33% to a new record low. The pending home sales index also fell sharply in June.

"The expiration of the homebuyer tax credit at the end of April has triggered a double-dip in the housing market, with new home sales falling particularly sharply in May," according to the report.

"The only reason why existing home sales did not fall significantly is because they are measured at the contract closing, rather than signing stage."

The number of homes in the foreclosure pipeline increased in the first quarter. The foreclosure inventory rate rose from 4.5% to 4.6% and the delinquency rate, which measures the proportion of all borrowers that have missed at least one mortgage payment, increased from 9.5% to 10.1%.