Purchases of new homes in the U.S. increased to an annual pace of 504,000 in April, up 15 percent from a revised March (439,000) and up 48 percent on a year-over-year basis (341,000 in April 2009) as Federal tax credits expired at the end of the month.

To receive a tax credit worth as much as $8,000, contracts had to be signed by the end of April, meaning demand will probably wane in coming months. Rising foreclosures, falling stock prices caused by concern over the European debt crisis and unemployment may hamper any recovery in sales and construction into the second half of the year.

For context, the pace of new home sales in the U.S. peaked at 1,389,000 in July 2005.
New Residential Sales: April 2010 [census.gov]
Sales of New Homes in U.S. Jump to Two-Year High [Bloomberg]
U.S. New Home Sales Up 13% YOY As Credits Set To Expire [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by DanRH

    In SF, do these credits make much of a difference to sales activity? I’ve heard it argued both ways on this board.
    Personally, I’d think they’d help a little as while most places in SF are pricey, $8k is still $8k.
    However, the news that interest rates are still extremely low and went lower recently (instead of higher as everyone thought they would) would be, I believe, a much bigger impact on SF sales. 30yr jumbo conforming at under 6%…that’s significant.

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