The expiration of tax credits for homebuyers is said to be largely responsible for July's unexpected 27% drop in existing home sales. But economist (and TWS contributor) Larry Lindsey says there's more to it than that.

"Obviously the end of the credit was a factor, but what was shocking was that we're actually below year-ago levels," Lindsey tells me. "So it suggests that there's probably something more than the credit expiration that's involved."

"More ominously," Lindsey says, "it is a very negative reflection on people's expectation for the future. Remember, interest rates are very, very low. So the cost of carrying a mortgage is down.... People must be betting or assuming that house prices have further to fall."

"I don't think these narrowly tareted programs have really helped," Lindsey says of the Obama administration's policies. "I think at this point the issue comes back to jobs, jobs, jobs."

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