In March, new-home sales jumped as buyers rushed to qualify for a federal tax credit and realtors zeroed in on the tax credit, which is expiring soon, as a means to ramp up interest. New single-family houses sales rose 27% in March to a seasonally adjusted annual rate of 411,000, up from the pace of 324,000 for the previous month of February. As home builders suggest an increase in foot traffic (or confidence) in recent weeks, many speculate it is spurred from buyers hoping to qualify for a federal tax credit.
The federal tax credit is available to people who fulfill two requirements: people who sign a contract to purchase a principal residence by April 30 and to complete the purchase by June 30. The tax credit can be as much as $8,000 for first-time buyers and as much as $6,500 for people who have already owned a home for a least 5 consecutive years during the past 8 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.
The federal tax credit provides emphasis from the government to increase consumer confidence and spending. Still feeling the effects of the recent recession, the American consumer is reluctant to spend on big ticket items such as housing, especially since the collapse of the housing market. With a ridiculous low 30yr mortgage rates available at the moment, the market (businesses) and the government are trying to spur change in the consumer behaviour to spend as the economy, for a better part, has mostly recovered.
I would totally agree with it this. There are a lot of new homeowners that are taking advantage of housing prices. I'd say it's most likely people that had good credit but did not want to take out an obscene loan to cover the cost of housing. So now, those types of buyers are coming out, getting cheap housing and getting a tax credit in return. However, I doubt we will see any substantial boom in the next few decades.
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