Tax credit boosts April home sales

A homebuyer tax incentive combined with improving consumer confidence and affordable options drove sales of previously owned homes in April to the highest level in five months. 

Purchases rose by 7.6 percent, up 23 percent from April 2009, the highest sales since November when the tax incentive was first set to expire, the National Association of Realtors (NAR) announced Monday. 

The tax incentive — worth up to $8,000 and aimed at first-time homebuyers — expired April 30 but homebuyers have until June 30 to close. The tax credit was extended from last fall with an initial expiration date of November 30.

Although there may be some temporary fallback for some months after the tax break, "other factors are supporting the market," said Lawrence Yun, NAR's chief economist, in a release. 

"There's been a return of buyer confidence with stabilizing home prices, an improving economy and mortgage interest rates that remain historically low," Yun said. 

The housing price correction is over despite higher inventory levels and seasonal gains last month, he said. 

"In fact, a majority of the markets have seen price gains recently," Yun said. "A return to old-fashioned responsible lending and buying will help the housing market avoid disruptive and painful bubble-bust cycles."

The average home price was $173,000 in April, up 4 percent from a year ago.