Tax Deal Fuels New-Home Sales

According to the Wall Street Journal, sales of homes soared last month with buyers rushing to take advantage of the expiring federal tax credit. On Wednesday the Commerce Department announced that sales of “new single-family homes rose 14.8% from the prior month to a seasonally adjusted annual rate of 504,000.”

Demand for new homes had also surged in March, when sales climbed 29.9% from the prior month. Sales in April were 47.8% higher than a year earlier.

The recent surge was likely the result of expiring government incentives, which provided an $8,000 tax credit for first-time buyers and a $6,500 credit for repeat homeowners. Contracts for those homes had to be signed by April 30. Buyers have to complete purchases by June 30.

The housing market is stabilizing after both sales and prices plummeted during the recession. Sales of existing homes, a far bigger number than newly built homes, jumped 7.6% in April, the National Association of Realtors said earlier this week.

Construction of new homes also is picking up. Starts for single-family homes rose 10.2% in April from March, the fourth-straight monthly rise, Commerce said earlier this month.

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Economy Not Likely To Reprise '09 Year-End Growth

From NPR News:

The economy grew at a 5.6 percent pace in the fourth quarter of last year, the Commerce Department reported Friday. Although the growth was slightly lower than expected, it was the economy's best showing in six years.

Most economists had expected no revision in the government's third and final estimate. Last month, the department put the growth rate for output of goods and services at 5.9 percent for the October-to-December period. That's up from third-quarter gross domestic product of 2.2 percent.

The latest announcement puts the GDP closer to the 5.7 percent in the initial advance estimate at the beginning of February.

The department's Bureau of Economic Analysis chalked up the downward revision to slower consumer spending and weakness in the commercial real-estate market.

Economists had reason to question whether the economy could sustain such a steep upward trend. Much of the growth comes from businesses restocking empty shelves after months of tepid consumer demand, which is expected to improve slightly — but not significantly — in the current quarter.