This is a huge part to the puzzle of our recovery. In my opinion, construction jobs have been reduced to such low levels that as new home sales continue to rebound it will mean new jobs, lots of new jobs. This article sites the first time home buyer tax credit as a stimulus for new home sales. Although I think they are a part, there has to be other buyers. The first time home buyers that went under contract by the end of April must close escrow by the end of June to qualify for the tax credit. Therefore, those motivated by the tax credit could by Spec homes, but the builders can’t build a home in 60 days.

We sold a new home to a buyer in April. The tax credit was a bonus, but was not their motivation. They had sold their existing home and the only homes out there that fit their needs were new homes. They did buy a Spec home from Shea Homes. Other motivators were the condition, being new, the floor plan and the location. The coming months will reveal how much the expiration of the first time home buyer tax credit affects the market.

I think it was a great idea, the tax credit. We needed to stimulate the market and give buyers an incentive to take a chance and enter since a bottom was not clear. Many bought distressed properties. Those properties needed carpet, paint, landscaping and appliances. Another interesting note will be to see how that money was spent and how it affected the economy.

Below is an article about the home sales.

US New Home Sales at 2-Year High in April

Published: Wednesday, 26 May 2010

By Reuters

Sales of newly built U.S. single-family homes rose faster than expected in April to their highest level in nearly two years, government data showed on Wednesday, as buyers signed contracts to benefit from a popular government tax credit.

The Commerce Department said sales jumped 14.8 percent to a 504,000 unit annual rate, the highest since May 2008, from an upwardly revised 439,000 units in March. It was the second straight month that new home sales rose.

Analysts polled by Reuters had expected new home sales to increase to a 430,000 unit annual pace from March’s previously reported 411,000 units.

Buyers had to sign contracts by April 30 and close on the home by the end of June to qualify for the federal tax credit.

New home sales are measured at contract signing and analysts believe buying activity will temporarily ebb in May.

However, they expect sales to pick up toward year-end as the economic and labor market recovery gain more vigor.

Data on Monday also showed the tax credit spurred sales of previously owned homes, which are recorded at contract closing, to a five-month high in April. Existing home sales are expected to rise through June when the tax credit ends.

Despite the jump in sales, the median sale price for a new home dropped a record 9.7 percent from March to $198,400, the lowest since December 2003, the Commerce Department said. In the 12 months to April, the median sale price declined 9.5 percent.

The number of new homes on the market fell a record 7 percent to 211,000 units in April, the lowest since October 1968. Last month’s sales pace left the supply of homes available for sale at 5.0 months’ worth, the lowest since December 2005, from 6.2 months ‘worth in March.