HOUSING STALLS IN U.S.
With the popular home buyer tax credit program in the U.S. coming to an end, housing numbers for May dropped significantly according to data released this week by the U.S. Commerce Department.
New-home production fell 10 percent to a seasonally adjusted annual rate of 593,000 units, the slowest pace since December 2009, while permit issuance slowed 5.9 percent to a rate of 574,000 units, its slowest pace since May 2009.
“Not surprisingly, builders tapped the brakes on new-home production and pulled fewer permits for new homes in May in response to an expected lull in buyer demand following expiration of the tax credits at the end of April,” noted Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich.
“Today’s numbers show an anticipated pull-back on single-family building following the tax credit deadline,” acknowledged NAHB Chief Economist David Crowe. “No doubt, a certain amount of building and buying activity that would have taken place in May was pulled forward to accommodate the program’s end date, which is why we have projected some softening of the numbers in the second quarter. That said, in the coming months, an improving economy, rising employment, low mortgage rates and stabilizing home values should play their part to keep the housing market moving forward.”
The may decline in housing starts was for single-family homes, where the government’s tax credits for first-time and repeat buyers had the greatest impact in the previous months. In that segment, starts fell 17.2 percent to a seasonally adjusted annual rate of 468,000 units. Multifamily starts, which can be more erratic on a monthly basis, showed a 33 percent gain in May to a rate of 125,000 units.
Permit issuance, which can be an indicator of future building activity, fell 9.9 percent on the single-family side to a rate of 438,000 units in May, while multifamily permit issuance rose 9.7 percent to 136,000 units in May.
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