WASHINGTON – The economy is improving, with home sales up, jobless claims down and inflation tame. Yet there are concerns the economic rebound won’t get much juice from the housing market, which is fueled by government tax breaks.

Sales of previously occupied homes grew by nearly 7 percent last month, more than expected, the National Association of Realtors said Thursday. It was a welcome sign after three months of declines, and a solid kickoff to what’s expected to be a strong spring selling season.

Nevertheless, many analysts caution that the housing rebound could fade in the second half of the year. They predict a flood of low-priced foreclosures will hit the market and push down prices in a destabilizing “double dip.”

Another threat to the U.S. economic recovery is fallout from the Greek debt crisis. On Thursday, Europe’s statistics agency found that Greece’s budget deficit last year was larger than previously thought, which may push the country to seek emergency loans.

So far, “the recovery looks like it will continue,” said Jay Feldman, senior economist with Credit Suisse.

Speaking in lower Manhattan, President Obama said the economy is recovering in what he called “the fastest turnaround in growth in nearly three decades.”

The Obama administration says its policies have helped stop the housing freefall. The government is offering tax credits to homebuyers and trying to stem foreclosures by paying incentives to lenders who rework loans for troubled borrowers.

The government is offering an $8,000 credit for first-time buyers and $6,500 for current homeowners who buy and move into another property.

Scrambling to beat the April 30 deadline, buyers pushed up March’s sales pace to a seasonally adjusted annual rate of 5.35 million, the highest since December. But critics contend the administration’s policies will do little but postpone the pain.

They say the government shouldn’t be providing a subsidy to buyers who would have acted anyway. And so far, the government’s foreclosure prevention effort hasn’t made a dent.

In fact, home prices could fall another 10 to 20 percent, warns Dean Baker, co-director of the Center for Economic and Policy Research, a liberal Washington think-tank.

 

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