A statewide builders group says buyer traffic in new homes dropped in July after the $10,000 tax credit expired at the beginning of the month. As a result, homebuilders are dialing back their activity, the group said.
Now the group thinks the popular program should be extended to avoid what happened in July. Here’s Robert Rivinius, California Building Industry Association’s President and CEO:
Activity stopped as quickly as it started, which is bad news for housing and the broader economy.
The credit was authorized as a kind of state economic stimulus and was more popular than lawmakers had expected when they authorized it in February, according to the CBIA. The credits ran out by mid-year.
The builders group included data for each metropolitan area to show how building permit activity (the indicator for future development) had dropped from June to July:
San Diego County issued 145 building permits for detached homes in July, down 33.2 percent from June.
But in 2008, before the new home tax credit was on the table, detached building permits fell a greater amount in the same months — 43.9 percent between June and July.
For multi-family properties like apartment buildings, the situation was similar. Building permits for multi-family dropped 74.6 percent this year between June and July. But they dropped nearly that much — 62.2 percent — between June and July last year.
I’ve got a call in to the CBIA folks to figure out if it’s a typical seasonal thing for permits to drop between June and July. It doesn’t appear to me that the dramatic change between June and July this year is due entirely to the loss of the new home tax credit.
What do you think? Have you bought a new home this year and are counting on the state tax credit? Leave a comment below.