My current understanding of this new tax credit is that you do not have to sell your current home but you do need to move to the new one. I even read that they are requiring you to live in the home the night you close escrow. It is a nice incentive but I worry that there are what I refer to as "loop holes" which will not allow the tax credit and you won't know about it until after you purchase the new home.
I think that the goal of the tax credit is to save the Real Restate market in more than just first time homebuyer's price range.
My understanding is that they must use the home as a primary residence so as long as they do that and meet other criteria they do not have to sell their existing home. I am interested in other information that is more specific.