This week's Real Estate stories

Despite falling mortgage rates, fewer people applied for mortgages to purchase a home last week, according to data from the Mortgage Bankers Association.

Last week was also the first week in more than a year when there was no federal home-buyer tax credit to lure prospective buyers. To qualify for that credit, a contract needed to be in place by the end of April and the deal must close by the end of June.

Still, low rates helped spur people to refinance their loans.

"Rates on 30-year mortgages dropped to their lowest level since mid-March," said Michael Fratantoni, MBA's vice president of research and economics, in a news release. "As a result, refinance applications for conventional loans jumped, hitting their highest level in six weeks.

"In contrast, purchase applications fell almost 10% in the first week following the expiration of the home-buyer tax credit, as the tax credit likely pulled some sales into April that would otherwise have occurred in May or later," he said.

The expiration of the credit could be prompting home sellers to slash prices: 22% of listings on the market as of May 1 experienced at least one price reduction -- that's a 10% increase from the previous month, according to data from Trulia.com.

"With more than a year of the federal government's involvement, we are now re-entering the free market system. As we readjust to the free market, we expect to hit turbulence in some markets," said Pete Flint, chief executive of Trulia, in a news release.

Read more real-estate news in this week's pages, including how to contest a low appraisal and a Realty Q&A about the proper use of community reserve funds. Plus, watch a video about a website that can help you remodel your home.

It's still too soon to say how dramatically the expiration of the credit will affect the housing markets, Flint said.

"We won't know the true severity of the tax credit expiration until the conclusion of the peak home buying season in the summer months. Only then will we have a better sense if the U.S. housing market can stand on its own two feet," he said.

Source: Market watch -- Amy Hoak,