Sector Snap: Homebuilders Up On Tax Credit Change

NEW YORK (AP) — Some housing stocks increased Friday after the government said thousands of first-time homebuyers can receive the new $8,000 tax credit before they complete their taxes, making it easier for people to buy homes.

The Federal Housing Administration said borrowers who use an FHA loan will be able to get advances from lenders, instead of waiting for the tax credit, for closing costs or a larger down payment. The FHA will still require a 3.5 percent down payment from borrowers, unless they work through a state or local housing program.

The tax credit for first-time homebuyers was included in the economic stimulus package signed by President Barack Obama in February.

Homebuilder stocks rose on the news. The stock of D.R. Horton Inc., the largest builder in the nation, added 32 cents, or 3.7 percent, to $9.01. Lennar Corp.'s stock climbed 35 cents, or 3.9 percent, to $9.25. Luxury builder Toll Brothers Inc.'s shares rose 55 cents, or 3.2 percent, to $17.99.

Homebuilders have slashed costs and curbed production sharply during the housing downturn. But recently, builders have said they've seen signs the three-year slump is ending.

On Thursday, the government said new home sales in the U.S. were nearly flat last month, rising 0.3 percent to a seasonally adjusted annual rate of 352,000. Economists surveyed by Thomson Reuters expected a sales pace of 360,000 units.