New home sales likely rose in March, US

[April 23, 2010]  WASHINGTON (AP) -- Sales of new homes are expected to show an increase in March, recovering from record-low levels in February, as better weather and government incentives boosted sales.

The Commerce Department's report on new home sales Friday is forecast to show a 7.1 percent increase to a seasonally adjusted annual rate of 330,000, according to economists polled by Thomson Reuters. That's up from an all-time low of 308,000 in February

The report counts signed contracts to buy homes, rather than completed deals. It is likely to capture 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.

On Thursday, the National Association of Realtors said that sales of previously occupied homes rose more than expected in March, reversing three months of declines. That report counts completed sales, so it lags the new home sales report as a measure of housing activity.

The realtors group said sales rose almost 7 percent to a seasonally adjusted annual rate of 5.35 million last month, the highest level since December.

Sales are likely to keep growing through the first half of the year as tax credits and low mortgage rates fuel purchases. The average interest rate this week was 5.07 percent for a traditional 30-year fixed-rate mortgage, Freddie Mac said Thursday.

But doubts remain about whether the momentum will be sustained in the second half of the year when federal support is gone.

[Associated Press; ALAN ZIBEL]

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