U.S. housing market heading for crossroad?

WASHINGTON, Feb. 15 (UPI) -- The U.S. housing market faces uncertainty as government support programs change direction, industry observers said.

With the Federal Reserve Bank set to stop a $1.25 trillion mortgage-backed security purchase program in March and a federal tax credit for first-time home buyers ending April 30, opinions vary on whether the market can stand on its own versus which direction it may fall, The New York Times reported Monday.

Neil Barofsky, the special inspector general hired to oversee the $700 billion Troubled Asset Relief Program said too much government support could "risk reinflating" the housing bubble that triggered the financial crisis three years ago.

"People are buying (homes) to get that tax credit … that's not healthy," said Denny Davis, mortgage loan originator at Horizon bank in Elkhart, Ind.

Twenty-three-year-old nurse Heather Stevens put 3.5 percent down on a $74,900 purchase recently and said, "it was a breeze to get approved."

Others say the housing market is too weak to stand on its own. Lending rates are expected to rise as the Fed withdraws from its purchasing program and "a rise in rates would kill us all by itself," said Barb Swartley, president of the Elkhart County Board of Realtors.