New Home Sales Strong in March with Tax Credit About to Expire

New home sales jumped 27% in March as the start of the spring home buying season got an extra kick from the soon-to-be expired homebuyer tax credit. Sales increased across all regions, most notably in the South (up 43.5%) and the Northeast (up 35.7%). The U.S. Census Bureau reported that sales of newly constructed homes rose to a seasonally adjusted annual rate of 411,000 in March from 324,000 in February, which was one of the lowest readings in the past 20 years. (The February rate was actually revised upward by 16,000 units.) The March home buying surge pushed the inventory of unsold new homes down to a 6.7-month-supply -- the lowest since December 2006. In that year, 536,000 newly completed homes were on the market compared to 228,000 today. Despite the depressed levels of activity, the National Association of Home Builders is pleased with the report. "It shows the homebuyer tax credit is working," said NAHB senior economist Bernard Markstein. But he noted it is pulling sales forward. "April will probably be good, but not as good as March and then there will probably be a drop-off with the tax credit going away," he said. Buyers have to sign a sales contract by April 30 to qualify for the tax credit and complete the closing by June 30.