Friday, April 23, 2010

A Lesson in Incentives

Incentives matter:

Sharp Rise in New-Home Sales in March

WASHINGTON (AP) — Sales of new homes surged 27 percent last month, topping expectations as better weather and government incentives helped sales.

The Commerce Department said Friday that new-home sales rose in March to a seasonally adjusted annual sales pace of 411,000. It was the strongest month since last July and the biggest monthly increase in 47 years.


The median sales price was $214,000, up more than 4 percent from a year earlier but down more than 3 percent from February.

The new-home sales report reflects signed contracts to purchase homes rather than completed sales and thus gives economists a feel for how many buyers were out shopping for new homes in a given month.

It is likely capturing consumers who are trying to qualify for federal tax credits that will expire at the end of this month. The government is offering an $8,000 credit for first-time buyers and $6,500 for current homeowners who buy and move into another property.

To qualify, buyers must have a signed contract complete by the end of next week and must complete the transaction by the end of June. Nearly 1.8 million households have used the credit at a cost of $12.6 billion, according to the Internal Revenue Service.

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