There’s bad news for the housing market today as we hear that pending home sales for May dropped by 30% which is the lowest level since 2001. This is a clear impact of the end of the Government Incentive Program at the end of April and shows incentives are still needed if a housing recovery is to take place.

The figures come from the National Association of Realtors who says the 30% drop is related to the seasonally adjusted index of sales agreements for previously occupied homes, according to CBS News. In the same month a year ago the index was 15.9% higher than now.

The tumble in buyers signing contracts to purchase homes was not confined to one area either, with declines nationwide. This spring, home sales had been helped by federal tax incentives whereby both first-time buyers and existing buyers could claim tax credits but the deadline for contracts to be signed by was April 30.

Although people had realized that sales may slacken once the tax incentives stopped, most were surprised at just how severe the home sales decline has been. For more on this go to cbsnews.com. Do you think that the federal tax incentives should be re-instated to propel a recovery in housing again? We’d be interested to hear how you feel about this.

Leave a comment below or follow us on Twitter.