January 27, 2010 |
|WASHINGTON (AP) -- December's sales of new homes are expected to have increased after plunging unexpectedly a month earlier in a sign that the ailing market is finally climbing back from the worst bust in decades.|
The Commerce Department's report on new home sales Wednesday is forecast to show a 4.2 percent increase to a seasonally adjusted annual rate of 370,000, from 355,000 in November, according to economists polled by Thomson Reuters.
It counts signed contracts to buy homes, rather than completed sales, so it will capture consumers' early reaction to an extended and expanded homebuyer tax credit.
New home sales fell 11 percent from October to November, indicating that consumers were taking their time after lawmakers extended the tax credit deadline from Nov. 30 until the end of April.
First-time buyers are still able to save up to $8,000, and now homeowners who have lived in their current properties for at least five years can claim a tax credit of up to $6,500 if they relocate.
Experts forecast that any housing recovery this year will be slow and sluggish. The National Association of Home Builders forecasts sales of new and previously occupied homes to weaken after tax credits for homebuyers expire in April. But 2010 sales of new homes will be up by more than one-third from last year's dismal levels.
John Freer, president of Riverworks Inc., a green custom home builder in Missoula, Mont., said traffic and sales picked up last month.
"We certainly had a good number of prospective buyers and we actually do have projects that we've inked in the last month that will be" started this spring, Freer said.
The builder said traffic this month looks positive, too.
"It's a combination of the tax credit and I think people are a little bit more optimistic than they were last year," Freer said.
By Alan Zibel, AP Real Estate Writer