Home Sales Surge As Tax Credit Deadline Approaches
But What Will Happen After April 30?
New-home sales jumped in March as buyers rushed to qualify for a federal tax credit and realtors homed in on the soon-to-expire credit as a way to ramp up interest.
Sales of new single-family houses jumped 27% last month to a seasonally adjusted annual rate of 411,000, according to the Census Bureau. That was up from the revised pace of 324,000 for February.
The Census estimate is based on a small sample and is frequently subject to large revisions.
Some economists believe the latest report may overstate the increase in sales activity and that the credit is simply moving sales forward that otherwise would have occurred later in the year.
Still, some home builders say foot traffic at developments has picked up in recent weeks, spurred by buyers hoping to qualify for a federal tax credit. The credit is available to many people who sign a contract to buy a principal residence by April 30 and complete the purchase by June 30.
“The tax credit has been a huge boon to the industry,” said Tim Minton, executive vice president of the Home Builders Association of Raleigh-Wake County in North Carolina. He said inventories of unsold homes in his area have dwindled, and “the national builders are starting to ramp up new production.”
The tax credit can be as much as $8,000 for first-time home buyers and as much as $6,500 for people who already have owned a home for at least five consecutive years during the previous eight years. The credit is available for individual taxpayers with annual incomes of as much as $145,000 or joint filers with incomes as much as $245,000.
