The recently passed Housing and Economic Recovery Act of 2008 helps first-time homebuyers enter the housing market in a number of ways, like offering a tax credit of 10 percent of the cost of the home, not to exceed $7500. Builders are doing their part to stimulate activity at a time when sales activity is beginning to pick up pace. Pulte Homes, for example, is giving an even broader boost to buyers as with its "Jump-Start" promotion whereby every buyer who signs a purchase agreement on a new Pulte, Del Webb or DiVosta home through September 15, 2008 is eligible for at least $7,500 in savings in addition to any government-sponsored tax credits that may apply to their home purchase.
"Pulte Homes fully supports the tax credit and steps taken in the housing stimulus plan to provide an infusion of buyer confidence within the housing industry," said Richard J. Dugas, Jr., president and chief executive officer of Pulte Homes. "While we expect the tax credit to get more first-time homebuyers off the sidelines and into a home, we wanted to stimulate home buyers and sellers at all points on the homeownership spectrum. The Jump-Start promotion ensures that all Pulte homebuyers receive at least $7,500 in savings in recognition of this legislation." Pulte Homes' Jump-Start promotion applies to new purchase agreements executed between August 5, 2008 and September 15, 2008.
Beazer Homes, one of the nation's top-10 homebuilders, has a free video Webinar to help detail the benefits of H.R. 3221 and related values the company is offering new buyers. A survey of 1,029 adults with household incomes of $40,000 or more, conducted by Market Tools on behalf of Beazer Homes, found 77 percent of respondents to be unaware of the new temporary tax credit. However, 29 percent of survey respondents said the availability of such a credit would increase their likelihood of purchasing a new home now.
"The tax credit combined with our special incentives represents a tremendous opportunity for renters to make the move to home ownership," said Ian McCarthy, president and CEO of Beazer Homes. "We're trying a new approach that we believe will resonate with many of today's buyers."
Twenty-five percent of the Beazer survey respondents said they would be more likely to ask questions of home sellers and mortgage lenders if they could do so anonymously. Additionally, more than 60 percent of respondents reported that a free Webinar or Web site was their preferred method of communication for information on the government tax credit.
"We recognize that buying your first home can be a stressful process that is intimidating for some, overwhelming for others," said McCarthy. "The Webinar is a great way for first-time buyers to get more information about the tax credit and to ask questions in a low-pressure, anonymous forum." About Beazer Homes USA Inc.
Signed into law July 30, 2008, the Housing and Economic Recovery Act of 2008 appears to be working. According to the latest forecast by the National Association of REALTORS' Pending Home Sales Index*, a forward-looking indicator based on contracts signed in June, rose 5.3 percent to 89.0 from a downwardly revised reading of 84.5 in May, but remains 12.3 percent below June 2007 when it stood at 101.4. Lawrence Yun, NAR chief economist, said sales have been in a pattern of rising and falling within a fairly narrow range.
"The vacillation of data from one month to the next indicates a housing market in transition," he said. "The rise in pending home sales was broad-based with all four regions showing gains. This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009."
The PHSI in the South jumped 9.3 percent to 92.4 in June but is 16.6 percent below June 2007. In the West, the index rose 4.6 percent to 101.0 in June but remains 1.7 percent below a year ago. The index in the Northeast increased 3.4 percent to 79.6 but is 15.4 percent below June 2007. In the Midwest, the index rose 1.3 percent in June to 79.6 but is 13.3 percent below a year ago.
"Provisions to stem foreclosures are helpful, but a greater lift to the economy should come from higher mortgage limits, enhancements to the FHA loan program and the first-time home buyer tax credit," said NAR President Richard F. Gaylord. "These are excellent tools that will help buyers get into the market to take advantage of the unprecedented drop in home prices in many areas, as well as a wide selection of inventory, to make an investment in their future."
With roughly 2.5 million first-time home buyers taking advantage of the temporary tax credit, existing-home sales are likely to rise 7.0 percent to 5.51 million in 2009 from a expected total of 5.15 million this year.
"Builders need to further cut production to help trim inventory. However, new-home sales are expected to bottom around the second quarter of next year with slight gains in the second half of 2009," Yun said adding that new-home sales are forecast to drop 8.8 percent to 464,000 in 2009 from 509,000 this year. Housing starts, he added, including multifamily units, should fall 8.8 percent next year to 795,000 from 960,000 in 2008.
*Note: The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales.