An ugly trend in the Mortgage Bankers Association's Weekly Applications Survey has real estate warning sirens blowing again. As the result of a relationship we see between mortgage activity and the First-Time Homebuyer Tax Credit, we are looking for a near-term pull back in the residential real estate marketplace.

Before we tie the information together, we think it best to ensure the reader understands the First-Time Homebuyer Tax Credit. The Worker, Homeownership and Business Assistance Act of 2009 extends and expands the First-Time Homebuyer Tax Credit allowed by previous acts. Most importantly to new homebuyers, Congress extended the tax credit, which was set to expire this year. Prospective purchasers of a principal residence can now benefit from the tax incentive if they enter into a binding contract to buy a home before April 30, 2010, and close on the home by June 30, 2010. The credit, which remains $8,000, can be applied to reduce your tax bill dollar for dollar, or to boost your tax refund, in either the reported 2009 or 2010 tax year (for qualifying 2010 purchases).