Tax Credits Boost New Home Sales

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. The Washington Post, By Renae Merle:

New home sales surged last month as home buyers rushed to take advantage of tax credits that have helped lift the housing market, according to government data released Wednesday.

Sales of new single-family homes rose 14.8 percent in April, compared with March, to a seasonally adjusted annual rate of 504,000, according to Commerce Department data. Sales were up 47.8 percent, compared to the same period a year ago. That was a much bigger jump than financial analysts had expected, bringing the sales rate to its highest level in about two years.

Sales rebounded the most in the Midwest, where they rose 31.6 percent. They were up 10.8 percent in the South, which includes the Washington region, and increased 21.7 percent in the West. Sales were flat in the Northeast.

Economists said the report reflects the impact of low mortgage rates and falling home prices, which has made a home purchase cheaper for many potential buyers. The median new home sales price in April fell to $198,400, compared with $219,200 during April 2009.

But the biggest boost, economists said, came from an $8,000 tax credit available to some first-time home buyers and a $6,500 tax credit available to some repeat homeowners who buy a new primary residence. To qualify for the tax credits, a buyer must have entered into a contract by April 30 and complete the transaction by June 30.

The tax credits also helped boost existing home sales, which jumped 7.6 percent in April, according to an industry report released this week. Now that the tax credits have expired, many economists are expecting to see sales activity in both markets begin to slow. The tax credits probably spurred some people planning to buy a house to purchase them earlier, analysts said.

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