Homes Show Unexpected Strength

By Lindsay Chin

Throughout February the sales of previously owned homes in United States showed unexpected strength. Just in February the sales of exisiting homes rose 5.1 percent after a 5 percent decline in January. From seeing the outlook of February sales, economists in March are concluding that the worst parts of the country hit by the housing bust are now beginning to emerge. Sales in the west grew 30 percent from a year earlier. The Obama administration and the Federal Reserve have introduced aggressive moves to try to lower borrowing costs, prevent homeowners from going into foreclosure and reduce the losses in the housing market. Along with sales, initial construction of U.S. homes unexpectedly surged in February. New construction of single-family homes along rose by 1.1%. However, last month (February) Obama had unveiled at $275 billion plan to help homeowners refinance and avoid foreclosure. The administration also included a $8,000 tax credit for first-time homebuyers in the stimulus package. In 2008, stimulus package provided this First-Time Home Buyer Tax Credit which gives people who had not previoulsy owned a home a $7,500 tax credit if they bought a home between April 9, 2008 and July 1, 2009; moreover, it required that the tax credit be paid back over 15 years. Now, the ARRA increased the credit from $7,500 to $8,000 and eliminated the repayment requirement for those who own to occupy their homes for at least 36 months. The market for homes seems on the rise and should be carefully watched.

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