YAKIMA, Wash. -- It was a long winter for home builders, but now workers are braving the heat and constructing new homes again.

Well, at least the ones that are less than $200,000.

That's because an $8,000 tax credit for first-time homebuyers has helped move Yakima County's real estate market upward.

In June, Yakima County generated nearly $34 million in residential sales, according to Headwaters-The Source, a Selah-based firm that tracks real estate sales in Yakima County. That's the highest dollar volume the county has seen since October 2008.

And it's a relief to local home builders.

In the city of Yakima, only two building permits were issued in January for new home construction, while 21 were issued in June. The June figure was not only up from earlier this year, but was also a slight increase from June 2008.

"If it went any further, we would have had an unmitigated mess," said Pat Strosahl, vice president of United Builders of Washington.

Nationally, new home sales are on the rise as well. Home sales for June showed the largest monthly increase in eight years, according to the Commerce Department.

Closer to home, Strosahl estimates that about one-third of United Builders' current new home customers are taking advantage of the tax credit, which is part of the federal stimulus plan.

"We have a chance of building out of" a down market, he said.

Trend starting to shift

Yakima County saw dramatic year-over-year declines in home sales throughout 2008 and the first few months of 2009.

But the past few months have shown an increase in new and existing home sales in the county, indicators of better days.

Amber and Ray Powell are among the buyers locally who are shifting the number and taking advantage of the federal tax credit.

The Powells didn't like wasting their money on rent and had thought about buying a home for a couple of years. But they started looking more seriously earlier this year when they heard about the tax credit.

Combine that with a home in the right price range -- they bought theirs for a reduced price of $167,500 -- and a near rock-bottom interest rate of 5 percent, the couple couldn't resist.

The young couple -- Amber is 26, Ray is 29 -- and their 3-year-old son moved into a four-bedroom, one-bathroom house on two acres in Mabton in June.

"How can you pass up $8,000 the government is going to give for free because you bought a house?" Amber Powell said.

Indeed, first-time homebuyers are a major catalyst for the growth in new and existing home sales.

Homes under $200,000 made up nearly 72 percent of all sales in Yakima County during the first half of 2009, according to Headwaters-The Source.

Sale prices rising, too

In June, there were 19 new homes sales in Yakima County, compared with 14 in May, a 35.7 percent increase, according to Headwaters-The Source.

The median price increased as well -- from $204,000 in May to $225,750 in June.

Nationwide, new home sales increased 11 percent between May and June, according to the Commerce Department.

New home sales in the West region, which includes Washington, increased 22.6 percent during the same period. The Midwest region showed the greatest increase at 43.1 percent.

"The rest of the market will follow the new home market," said Doug Rich, broker of Prestige Realty in Yakima.

Sales for existing homes, both nationally and locally, also increased.

Nationally, sales of existing homes, which include condos, increased 3.6 percent between May and June, according to figures from the National Association of Realtors.

In June, Yakima County had 148 existing home sales, compared with 133 a month earlier, an 11.3 percent increase, according to Headwaters. Those figures do not include condos or manufactured homes.

Median home prices, however, decreased during the same period -- from $167,500 in May to $164,000 in June.

Rich estimates that there are currently offers on about one out of five houses in the Yakima Multiple Listing Service. That ratio was much lower over the winter -- just one out of ten.

Still not a hot market

Despite these small signs of recovery, the local real estate market remains far from hot.

When compared with June of last year, new home sales for the month were still down 40.6 percent while existing home sales during the same period were down 7.5 percent, according to Headwaters.

"It's good news, but it has to be tempered with the realization of how low the new home sales numbers remain," said Glenn Crellin, executive director of the Washington Center for Real Estate Research at Washington State University.

Driving the decline is a dramatic drop-off of sales in the higher price ranges. Homes priced $400,000 and up only made up 2.8 percent of all real estate sales in the first six months of 2009, according to Headwaters.

Mid-priced homes, between $200,000 and $400,000, fared better, making up about 25.2 percent of home sales in the first six months of 2009.

"It looks like the expensive homes are sitting and sitting with not much going on," he said.

And even with the first-time buyers' tax credit, those buyers still need to secure financing, which is more difficult than in the past.

Rich, the broker from Prestige Realty, estimates that the more stringent financing process has delayed the sales process. It has increased in the past few months from 30 to 45 days to as long as 60 days.

"If you're a first-time buyer, you have a big hurdle to jump," he said.

Uncertain recovery

When the market will fully recover is tough to predict.

"There are people that are waiting for the real estate market to bottom out," said Ken Nelson, broker of DK Bain Real Estate in Sunnyside.

One factor that will drive the market forward is more consumers making the leap to buy.

"I think consumers today have a lot of fears of what may be coming up in the future," Nelson said. "I think they're more apt to hold on to their money, to hold on to what home they have, whatever it is."

Once people see success from new buyers, other buyers in all price ranges will likely move forward on their purchase plans, he said.

These positive statistics will help.

"To some extent, the malaise that came out from a few markets dragged down the rest of the country," Crellin said. "Now, we're starting to hear the good news coming out of these markets. That's beginning to buoy the other markets."

* Mai Hoang can be reached at 509-577-7685 or mhoang@yakimaherald.com.