First-time home-buyer tax credit expires on Dec. 1 and data suggests that may have played a role in recent building
Nationwide housing starts and permits posted substantial gains in June as home builders responded to improved market conditions and the impending expiration of the first-time buyer tax credit, according to data released by the U.S. Commerce Department. A 3.6 percent gain in overall housing starts was reported to a seasonally adjusted annual rate of 582,000 units and an 8.7 percent gain in permit issuance to 563,000 units.
"The upcoming expiration of the first-time home buyer tax credit on Dec. 1 is encouraging some builders to get homes started now so that they can be completed in time for clients to take advantage of this attractive buying incentive," said NAHB chairman Joe Robson, a home builder from Tulsa, Okla., in an NAHB press release "However, there is still much concern about the difficulty of financing new-home production and continuing weakness in the job market."
"Today's report was in keeping with our forecasts for some glimmers of improvement on the single-family side in the second quarter, and also with the results of our latest builder surveys," says NAHB chief economist David Crowe. "Many remain very cautious, however, in the face of the severe tightening of credit for acquisition, development and construction financing, and increased instances of low appraisals tied to improper use of distressed properties as comps, both of which threaten to derail a housing and economic recovery going forward."
Single-family housing starts rose for a fourth consecutive month in June, posting a 14.4 percent gain to a seasonally adjusted annual rate of 470,000 units, while single-family permits rose for a third consecutive month, posting a 5.9 percent gain to 430,000 units. Meanwhile, the multifamily side, which characteristically displays greater month-to-month volatility, posted a 25.8 percent decline in starts following an unsustainably large gain in the previous month, to 112,000 units. Multifamily permits rose 18.8 percent to 133,000 units from an abnormal low in May.
Regionally, housing starts were mixed, with the Northeast and Midwest posting big gains of 28.6 percent and 33.3 percent, respectively, and the South and West posting declines of 1.4 percent and 14.8 percent. However, the declines in both the South and West were entirely driven by dips in multifamily production.
Permit issuance was up across the board in June, with the Northeast posting a 5.4 percent gain, the Midwest a 3.4 percent gain, the South a nearly 14 percent gain and the West a nearly 2 percent gain.
Contact: National Association of Home Builders, 1201 15th St., N.W., Washington D.C., 20005. Tel: 202-266-8200. www.nahb.org.
This article originally appeared in the September 2009 issue.