New Homes Sales Spike, Analysts Cite Tax Credit Expiration

New home sales jumped 15% in April to the highest level in nearly two years following a 30% surge in March. Most analysts attributed the strong performance to two homebuyer tax credits that hit an expiration deadline recently, saying consumers rushed into contracts, pulling these sales "forward." The U.S. Census Bureau reported that sales of newly constructed homes rose to a seasonally adjusted annual rate of 504,000, compared to a 439,000 rate in March. New home sales rose 48% compared to April 2009. Sales were "driven by looming expiration of the tax credit and cheap, cheap home prices," said Mike Larson of Weiss Research. He noted the median sales price "tanked" by 9.7% in April from the prior month. Barclays Capital analyst Theresa Chen said with the credits now off the table, "Some negative payback is likely in the coming months, but looking through the volatility, the underlying trend should remain mildly positive."