In June, home prices ticked up in 17 out of 20 major cities — most in San Francisco (up 14.3 percent year-on-year). Prices remained stable in Phoenix and Seattle, and declined only in Las Vegas.

The Case-Shiller index reports a rolling three-month average, meaning the June data included May and April transactions. That means that the data is skewed to the period before the expiry of the tax credits, $8,000 for first-time buyers and $6,500 for some repeat buyers.

On top of that, the Commerce Department said sales of new single-family houses dropped 12.4 percent between June and July. That makes July sales — of 276,000 houses — the lowest level in the 47 years the Commerce Department has kept the data. Most economists expected sales to rise to 334,000 homes.

The two reports ginned up fears that the United States might be headed for a second leg down for housing — many economists see prices continuing to fall again, nationally — and even a double-dip recession. The New York Stock Exchange plummeted, as did indexes in Europe. Oil prices fell.

But what do poor home sales have to do with a double dip? A lot. For one, housing makes up a huge part of the U.S. economy. If realtors and homebuilders and mortgage brokers and other associated businesses are ailing, a lot of the economy is ailing. Additionally, falling home prices can be catastrophic for homeowners. They mean that more people cannot sell their homes — hurting housing-related businesses, and meaning less labor mobility. A reader of Andrew Sullivan’s blog demonstrates how:

I lost my job in May. I finally got an interview with an out of state firm last week.  The thought of moving my family across the country was hard enough to consider. They made me an offer. It would be a cut over my last job but still it would provide health insurance – heck they even would chip in on living expenses.  Talked to my real estate agent today.  We are under water by about twelve thousand. My choices are stay unemployed or walk away from the house. I have till tomorrow to make this choice.

“In swiftly making the First Time Homebuyer Credit immediately available to more than 2.6 million homebuyers, a very small number of payments were made to prisoners incorrectly, which the IRS is now taking all steps to recapture and to prevent going forward,” the IRS said. “The IRS will follow up on every instance of an improper prisoner payment and take swift and appropriate enforcement actions.” It has also promised to go after and recoup any other losses from fraudulent claims on the effective, if easy-to-game, program.

Other issues in the full report: 2,555 taxpayers received $17.6 million for homes purchased prior to the dates allowed by law; 241 prisoners claimed the credit while serving life sentences. (None of the prisoners cited in the report were filing joint returns either, by the way.) In one case, 67 taxpayers claimed the credit on the same home. All in all, more than 10,000 filed for the credit on homes used by other taxpayers to claim the credit. And, 34 IRS employees claimed the credit despite already owning homes — in addition to the 53 IRS employees publicly censured for doing the same last summer.

Here’s more about the study from EurekAlert!, a science and technology news site.

Unemployment rates topping 10 percent are the highest in 26 years. Families are working more hours and taking on more part-time jobs. At the same time, unemployment benefits are running out for many families. Faced with the worst recession since the Great Depression, many U.S. families have no choice but to draw on inadequate savings to pay for essential household expenses. Many of these families are at risk of losing their housing. They may also cut back on food and healthcare to make ends meet.

The report, from Brandeis’ Institute on Assets and Social Policy, tried to measure families’ asset holding to their ability to pay for essential household expenses and also to invest in future opportunities for mobility, such as a home purchase, business start-up, retraining, or education. The report also showed that less than half of all families have sufficient savings to address essential expenses and invest in opportunities for mobility when faced with a job loss. And things get worse from there:

Moreover, many more households of color lack the financial assets to meet their expenses during periods of unemployment. Sixty-six percent of African American and Latino households are not asset secure, and only 20 percent of households of color have financial assets to invest in opportunities for mobility. While most American families lack sufficient wealth to invest in education, housing, business ventures, or training for better jobs, the dramatic distance that marks families of color is a reflection of the profound, deep, and systematic racial wealth gap.

Instead of moving to create jobs, Congress took action recently to extend the first-time homebuyer tax credit and to give homebuilders a big tax break.  Hopefully a glimpse of the harsh realities experienced by unemployed workers and their families will entice lawmakers to pass legislation that will produce many more much-needed jobs, instead of propping up home prices and paying off interest groups.

You can’t pin this one on Republicans alone. It’s true that Sen. Johnny Isakson (R-Ga.) came up with the idea to revitalize the proposal, which first surfaced earlier this year in negotiations over the stimulus package – -but Senate Banking Committee Chairman Christopher Dodd (D-Conn.) is a co-sponsor. Coincidentally, I’m sure, Dodd is in the midst of a tough re-election battle. I’d imagine offering a $15,000 credit for first-time homebuyers and eliminating any income ceilings so even wealthy people are eligible probably will lpay pretty well in Greenwich.

First, a little background. As TWI reported recently, Congress approved the $8,000 tax credit as a way to jumpstart the housing market, and HUD came up with a plan to allow homebuyers to access the credit immediately for downpayment money. This seemed slightly problematic to many, given the long history of fraud and abuse associated with downpayment assistance schemes for government-backed loans. Also, some wondered why the government was helping people who couldn’t afford downpayments to buy houses, given that having no skin in the game leads to defaults, which was supposed to be one of the lessons learned from the mortgage crisis.

To its credit, HUD came out with revised guidelines for the program, requiring borrowers to put down some of their own money for the downpayment, along with accessing the credit. And it issued stern warnings to third-party firms that might try to offer bridge loans for the credits at high interest rates.

That should have ended it. But then lawmakers came up with the new idea to increase the size of the credit and open it to everyone. Here’s how Clusterstock summarizes it:

The government continues its desperate effort to make the cost of dwelling more expensive. There’s already an $8,000 homebuyer tax credit, but it’s obviously not done enough, so Senators Johnny Isaacson and Christopher Dodd are proposing to up it to $15,000.

And, perhaps more importantly, they’re eliminating the income requirements. Under the previous tax credit, a couple had to have a combined income of less than $150,000. Now any upper-middle class homebuyer is eligible, and hopefully this will get the McMansion sales going again.

Yes, that’s just what America needs – more McMansions.

It’s true that interest rates are jumping and the housing market isn’t exactly soaring. And the Obama administration’s homeowner rescue plan isn’t quite taking off, either. Those are serious problems that need to be addressed. Is handing out a $15,000 tax credit the best way to accomplish that?

If this tax credit expansion passes, look for someone to suggest a way to let borrowers turn it into downpayment money. Then they can buy bigger houses than they probably can afford.

We might not have learned much from the current foreclosure crisis, but at least the builders of all those McMansions will be happy.