Misty Reyes

Amber and Jason Castro, both 24, think they're blessed to be among a wave of first-time homebuyers laying a foundation for a home sales comeback.

The newlyweds bought a new house in Ooltewah, something they felt would elude them for several years, even with falling interest rates and home prices.

But then the nurse and social worker, who graduated from Southern Adventist University in 2007, heard about an $8,000 tax credit for first-time buyers in 2009.

"The tax credit was a huge push for us to start looking when we did," Mrs. Castro said.

In LaFayette, Ga., Misty Reyes also jumped at what she saw as a excellent opportunity -- trading her $600-a-month rent payments for a $420-a-month house payment.

"If the stimulus tax credit had not been available, I don't know if I'd be sitting in this house right now," said Ms. Reyes, 35.

Economists have credited falling home prices, lower interest rates and the tax credit for spurring home sales in recent months. For the first time since June 2004, home sales nationwide inched up for four consecutive months.

In July, new home sales increased 9.6 percent nationwide, while existing home sales rose 7.2 percent, according to recent reports.

Locally, sales began climbing again in May, and July's 575 Chattanooga area home sales showed the most action since August 2008, said Robert Nodes, spokesman for the Chattanooga Association of Realtors.

"The technical word for sales earlier this year was 'crummy,'" Mr. Nodes said.

But the American Recovery and Reinvestment Act of 2009 homebuyer tax credit helped Realtors move houses, according to local agents.

"It has really helped. And first-time homebuyers really kick-start other sales," said Nickie Schwartzkopf, president of the local Realtors association. "They buy the starter houses. Then those sellers move up in the market, too."

Ms. Schwartzkopf and LaFayette, Ga., Realtor Bobby Teems said they hope to see the tax credit extended beyond its Nov. 30 cutoff date and expanded to $15,000 for all buyers.

"I'd say 40 percent of our buyers are buying because of the tax credit," said Mr. Teems, who helped Ms. Reyes find her new home in LaFayette. "To a lot of people, the tax credit is the difference in buying and not buying."

Georgia further has sweetened the pot with a state tax credit of up to $1,800 over three years, he said.

"And there are so many good bargains out there," Mr. Teems said.

U.S. Sen. Johnny Isakson, R-Ga., tried unsuccessfully earlier this month to expand and extend the credit by attaching it to the cash for clunkers vehicle purchase incentive extension bill.

Now Sen. Isakson, who also is a Realtor, is sponsoring the idea again with a stand-alone bill that has bipartisan support, according to an Isakson spokeswoman.

U.S. Sen. Bob Corker, R-Tenn., told the Chattanooga Association of Realtors last week that he also supports the bill, which calls for expanding the credit to $15,000 for all buyers and extending the cutoff date.

"It's possible that it could pass our first day back (after the summer recess), but I just can't say for sure," he said.

Mr. Nodes said he hopes that happens.

"That would really get the housing market rolling, and if housing is rolling, 40 other industries are rolling with it," he said.

Ms. Reyes said she has joked at her library job in LaFayette that she is doing her part to stimulate the economy.

"I purchased all of my appliances here in town at Sears," she said. "And I've been to Lowe's more in the last month than I have in my entire lifetime."

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