Sales of new homes jumped 27% in March as the start of the spring homebuying season got an extra kick from the homebuyer tax credit that is expiring soon.
The Census Bureau reported Friday that sales of newly constructed homes rose to a seasonally adjusted annual rate of 411,000 in March from 324,000 in February, which was one of the lowest readings in the past 20 years.
(The February rate was actually revised upward by 16,000 units.)
The March homebuying surge pushed the inventory of unsold new homes down to a 6.7-month supply.
That was the lowest supply since December 2006.
In that year, 536,000 newly completed homes were on the market, compared with 228,000 today.
Despite the depressed levels of activity, the National Association of Home Builders is pleased with the report.
"It shows the homebuyer tax credit is working," said Bernard Markstein, a senior economist at the Washington trade association.
But the builder group's economist noted that the tax credit is pulling sales forward.
"April will probably be good, but not as good as March, and then there will probably be a drop-off with the tax credit going away," Markstein said.
Buyers have to sign a sales contract by April 30 to qualify for the tax credit. They must complete the closing by June 30.