Sale of homes hits hopeful high — for now

Local home sales are peaking in Utah and nationwide as homebuyers try to take advantage of government tax breaks due to expire at the end of the month.

The president of the Utah Association of Realtors told the Deseret News on Friday that he has seen a significant rise in new home sales in recent weeks, prompted by the impending end of the federal incentive launched as part of the economic stimulus program.

"The last couple of weeks, in particular, have been very busy with folks trying to capture the federal tax credit," he said. The incentive requires homebuyers to sign a purchase contract by the end of April, he noted.

March saw a 30-percent hike in the number of homes and condominiums sold in Salt Lake County compared to a year ago, according to Dave Anderton, spokesman for the Salt Lake Board of Realtors. While sales are up, the median price of homes and condos sold last month was $200,000, down 9 percent from a median sales price of $220,000 in March 2009.

"If you look at home and condo sales from Oct. 1, 2009, through March 31, 2010, in Salt Lake County, there was a 32 percent increase compared Oct. 1, 2008, through March 31, 2009," he said.

Nationally, sales of new homes took the biggest monthly jump in 47 years in March, and some analysts predict demand for homes will fall again over the summer, preventing the beleaguered sector from adding much to the economic recovery.

The Commerce Department said Friday that new home sales skyrocketed 27 percent in March, bouncing off February's record low. The figure blew past expectations as better weather and government incentives boosted sales.

New home sales hit a seasonally adjusted annual pace of 411,000, the strongest month since last July. The data reflect signed contracts to purchase homes rather than completed sales and thus give economists a feel for how many buyers were out shopping.

It is likely capturing consumers who are trying to qualify for federal tax credits that will expire at the end of next week. 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 by April 30 and must complete their transaction by the end of June.

"Everyone's just trying to sign on the dotted line," said Jennifer Lee, an economist with BMO Capital Markets.

The rise in new home sales was seen nationwide. Sales grew a whopping 44 percent in the South and 36 percent in the Northeast. They also rose about 6 percent in the West and 3 percent in the Midwest.

The number of new homes up for sale in March fell 2 percent to 228,000. At the current sales pace, it would take nearly 7 months to exhaust that supply.

Still, new home sales are down 70 percent from their peak in July 2005, and some analysts predict they will sink back to the winter's dismal levels after the tax credit runs out.

"I expect we'll see a very sharp drop back," possibly to new record lows, said Paul Ashworth, senior U.S. economist with Capital Economics.

e-mail: jlee@desnews.com