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Ending Tax Credit Triggers New-Home Sales Surge in March 2010

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RISMEDIA, April 29, 2010—With many buyers rushing to take advantage of the federal home-buyer tax credit set to expire on April 30, sales of newly built single-family homes surged 26.9% in March to a seasonally adjusted annual rate of 411,000 units, the Commerce Department recently reported. Sales increases were posted in all four regions of the country.

“Undoubtedly, the tax credit is working,” said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. “Builders are seeing a growing optimism among consumers.”

“The near record-breaking 27% increase over February was the result of home buyers taking advantage of the tax credit as well as a carryover of demand that was held back by unusually bad weather in February,” said NAHB Chief Economist David Crowe.

“The increased sales are very welcome news and sales will continue to improve, although we expect them to plateau in late spring and early summer when the credit expires. Following that, the housing momentum will be carried forward by low interest rates, pent up household formations, excellent affordability conditions and a budding employment growth,” Crowe added.

Regionally, sales increased 35.7% in the Northeast, 4.3% in the Midwest, 43.5% in the South and 5.7% in the West.

The nationwide inventory of new homes on the market dropped a negligible 0.8% in March, to 227,000 units as builders continued to maintain small inventories. With the increased sales pace and low inventory level, the month’s supply of new homes for sale dropped from 8.6 in February to 6.7 in March.

For more information, visit www.nahb.org.

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