The first time home buyer credit had a short term positive effect, but the market will readjust. And that likely will mean slower sales in the coming months than if there'd been no credit.
Here's an analogy:
Consider a shoe store. Most people need shoes. But most people also have a limit on the number of shoes they need and want. They're not shoe collectors. The national average seems to be that people buy about 5 pairs a year. They do own more, but their inventory stays fairly stable. As one pair wears out, they buy another.
So one day a local shoe store starts giving out $8 rebates for every pair sold. And that really spurs demand. Parents buy another pair for their kids. Men and women buy another pair or two. But the program has a finite length. All shoes must be purchased by June 30. So sales of shoes go up.
But after June 30, what happens? People only walk so far a day. They only need a finite number of shoes. And they have other things to spend their money on--food, health care, and so on. So now they've bought all the shoes they need. And they take a break. True, in a few months or more they'll need more shoes. But not now. And even though buying conditions may be good--an ample number of shoes available, affordable credit card rates for anyone who wants to put the purchase on their credit cards--nearly everyone who needed shoes bought them.
Certainly some folks who just moved into town and had never bought shoes in that town are first-time shoe buyers. But now they've stocked up. And although the rebates first were designed for those new shoe buyers, those rebates were extended to people who already owned shoes for awhile. So those folks also bought shoes and now they're in good shape, too.
So, what's going to happen?
Shoe sales will drop. The demand has been satisfied. When the shoes start wearing out, some people will get them repaired. Others will buy new shoes. But, for the moment, they've bought all the shoes they want.
On top of that, now when someone goes into a shoe store and remembers that they saved $8 on a pair of shoes with the rebate, they'll expect shoe prices to cost less than they had pre-rebate. They'll say to the shoe salesman: "Last month, my neighbor bought these pair of shoes for $100 and got $8 back. Now I see the shoes for sale here at $100. I'd like to get $8 back, too. Or at least something. If you want to sell me these pairs of shoes, you'll have to do better than $100."
See how it works?
Hope that helps.