New-Home Sales Rise Only Marginally in August
Following four months of solid gains, sales of newly built, single-family homes edged up by less than 1% in August as the window for using the first-time home buyer tax credit began to close. Sales posted a meager 0.7% gain to a seasonally adjusted, annual rate of 429,000 units for the month, according to data released by the U.S. Commerce Department on Sept. 25.
"With the $8,000 home buyer tax credit set to expire at the end of November, prospects for being able to purchase a newly built home and have that transaction completed in time to take advantage of the credit dimmed considerably as of August," said NAHB Chairman Joe Robson. "Congress must take immediate action to extend the tax credit if the positive momentum in home sales is to continue so that a sustained housing and economic recovery can take hold."
"One very positive aspect of the August report was the continued decline in the inventory of new homes for sale," noted NAHB Chief Economist David Crowe. "The inventory declined for a 28th consecutive month in August, to 262,000 units, bringing us down to a seven-month supply at the current sales pace,” he said.
However, he said, “the fact that builders are not adding to their standing inventory indicates their concerns about what happens to buyer demand once the tax credit expires, and it is also directly tied to the extreme lack of housing production credit that continues to weigh down the industry and stifle its potential as an engine of economic growth."
NAHB is calling on Congress to extend the first-time buyer tax credit for another year and to offer it to all income-eligible buyers of primary residences. NAHB is also urging Congress to help eliminate the credit crunch, correct faulty appraisal practices and expand Net Operating Loss tax provisions to help businesses avoid having to make more layoffs.
On a regional basis, new-home sales were somewhat mixed in August. A 12% gain in the West was entirely responsible for the increase in the overall number. The South posted no change from the previous month and the Northeast and Midwest each recorded declines, of 16.3% and 5.8%, respectively.