WASHINGTON — Production and permitting of new single-family homes continued on an upward trajectory in July, according to newly reported numbers from the U.S. Commerce Department released Aug. 18. Meanwhile, substantial declines on the multifamily side dragged down the overall numbers, with combined single- and multifamily starts down 1% to a seasonally adjusted annual rate of 581,000 units and combined single- and multifamily permits down 1.8%, to a 560,000-unit rate.
Single-family housing starts posted a 1.7% gain to a seasonally adjusted annual rate of 490,000 units in July, while single-family permits registered a 5.8% gain to 458,000 units. Both of these were the highest levels registered since October of 2008. Meanwhile, multifamily starts tied a record low set in April of this year, falling 13.3% to a 91,000-unit rate. Multifamily permits fell 25.5% to 102,000 units.
"With the impending expiration of the first-time home buyer tax credit at the end of November, July was probably the last month in which to get homes permitted and started in time for customers to take advantage of that valuable incentive," said Joe Robson, chairman of the National Association of Home Builders (NAHB) and a homebuilder from Tulsa, OK. "Builders were responding to improved demand related to that upcoming deadline and also to the first signs of an economic recovery. However, it remains to be seen what happens after the tax credit expires, and the severe credit crunch that has curtailed many multifamily projects is looming over single-family builders as well. Congress and the Administration need to take action now in order to maintain the momentum toward a housing and economic recovery."
"The latest report marks a fifth consecutive month of improvement in single-family housing starts and a fourth consecutive month of improvement in single-family permits," noted NAHB Chief Economist David Crowe. "This is exactly in keeping with our latest member surveys, which indicate that builders are cautiously optimistic about single-family sales conditions over the next several months. That said, the significant drop-off in multifamily construction and permitting shown in recent months' reports may be a harbinger of the financing challenges facing all homebuilders going forward. A severe lack of credit for acquisition, development and construction financing, along with other issues tied to low appraisals and the upcoming expiration of the first-time home buyer tax credit, could derail the progress made so far. Government action is required to ensure that housing can help generate jobs and economic growth in the days ahead."
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. In addition, NAHB is urging Congress to help eliminate the credit crunch, correct faulty appraisal practices and expand Net Operating Loss tax provisions that can help avoid more layoffs.
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