"We're seeing some big increases in many of the areas with the biggest price corrections," said NAR spokesman Walter Maloney. "That's no coincidence."

A National Delinquency Report from the Mortgage Bankers Association showed that California, Florida, Arizona and Nevada combined accounted for 44% of all foreclosure starts during the quarter. Last quarter, the Cape Coral metro area in Florida recorded the largest decline in home prices: 52.8% to $84,000, according to a NAR report.

After California, Texas and Florida were the next states with the largest number of claims, with over 29,000 each. Arizona had nearly 9,300 claims and Nevada rounded out the top 20, with 5,259.

Most of the smaller states made up the bottom of the list, with Vermont's first-time buyers bringing up the rear, claiming just 351 credits.

Applying for the credit is as easy as filing income taxes. First-time homebuyers just have to claim it on their return -- no other forms or papers have to be filed.

National Association of Realtors estimated an extra 350,000 sales will occur this year, solely because of the credit. The National Association of Homebuilders, more conservatively predicted 165,000 extra home sales.  David Goldman