April 23rd, 2010
03:04 PM ET

Financial Dispatch: Home sales skyrocket

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Andrew Torgan
CNN Business News Producer

Sales of new homes shot through the roof last month at the fastest single-month rate in nearly 50 years as buyers snatched up properties before the expiration of an $8,000 tax credit.

New-home sales soared 26.9% in March, snapping a four-month streak of declines, the Census Bureau said.

And on a year-over-year basis, sales jumped 23.8% from March 2009.

New-home sales rose in every region of the U.S. The South saw the biggest jump - up 43.5%, while the Northeast saw sales climb 35.7%. The West and Midwest regions both saw single-digit percentage growth, with the West up 6% and the Midwest up 4%.

This follows a report on Thursday from the National Association of Realtors that showed sales of previously-owned homes - known as “existing home sales” - increased by nearly 7% in March as new home buyers looked to cash in before that tax credit expires on April 30.

Back in November, lawmakers extended and expanded the $8,000 credit, which also allows some repeat buyers to qualify for a $6,500 credit.

Drilling further down, the average price of a new home was $258,600, according to the Census Bureau. That’s flat compared to a year earlier, and 12% below average prices in 2008.

So will the gains hold? Experts think they will continue into this month before dropping off over the summer. But the precarious job market continues to threaten the full recovery of the housing market.

As for the reaction on Wall Street, the broader market largely ignored the report and instead remained focused on earnings and debt issues in Greece, but home building stocks went on a tear.

Hovnanian Enterprises led the charge, with shares rising as much10% at one point. Other winners included Pulte Group, Lennar, KB home and D.R. Horton.

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Filed under: Andrew Torgan • Economy • Finance • Housing Market
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