The Commerce Department reported today that nationwide new home sales plunged 33 percent in May and analysts and economists immediately declared buyers aren’t buying homes because they can’t get tax credits.

 Here in Southern California’s Inland Valley, sales of newly constructed homes may have dropped in May, but buyers still are getting pre-approved and writing offers, and sellers are getting offers. Clients in Upland got a full-price offer from well-qualified buyers 10 days after listing their home in May; escrow closes in early July.

What’s down is inventory.

When home prices dropped, builders halted new construction projects. With typical mortgage payments half what they were at the 2006 peak of the California market, buying a home now makes a lot of sense to renters and “move-up” home buyers alike. Investor and cash buyer activity remained above average in May, according to DataQuick Information Systems.  

Mortgage interest rates are also down.

Yes, you have to have a good credit history and be able to make the monthly payments. That’s a good thing. When “stated income” and interest-only loans were fueling housing debt, the idea of limiting mortgage payments to about 25 percent of monthly income was deemed old-fashioned by many. It makes a lot more sense these days.