Privately owned housing starts in August rose 1.5% to a seasonally adjusted annual rate of 598,000, the U.S. Department of Commerce reports.
Starts on properties with five or more units rose from a revised total of 85,000 in July to 115,000 in August. Production of new single-family homes, however, declined 3% to a rate of 479,000 units, ending what had been a five-month run of improvements.
"With the $8,000 first-time home buyer tax credit set to expire at the end of November, the window is now basically closed for being able to start a new home that can be completed in time for purchasers to take advantage of that," says Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. "Builders are, therefore, pulling back on new construction at this time."
NAHB Chief Economist David Crowe says home builders are concerned about how the market will look after the tax credit expires.
"On top of the credit's impending expiration, builders continue to grapple with a severe lack of credit for housing production loans and inappropriately low appraisals that are tied to the use of distressed properties as comps – both of which blunted the tax credit's positive effect," Crowe says. "Together, these three challenges threaten to completely stifle the upward momentum we've seen in the first half of 2009."
NAHB is calling on Congress to extend the first-time home buyer tax credit for another year and to offer it to all income-eligible buyers of primary residences.
SOURCE: Census Bureau, National Association of Home Builders