SACRAMENTO, Calif. –– Total housing starts saw a significant increase in June when compared to May, which the California Building Industry Association said was additional evidence that the state new-homebuyer tax credit enacted earlier this year is helping to generate new-home sales, and in turn, job-generating home construction.
“This is welcome news,” said Robert Rivinius, CBIA’s President and CEO. Rivinius said builders are responding to the increased traffic that the tax credit has generated and are starting new projects and putting people back to work.
“Builders are reporting that the demand spurred by the tax credit has helped clear out new-home inventories and we are now seeing an increase in housing production as builders ramp up projects to meet the demand,” Rivinius said. “This is great news for the tens of thousands of people who have lost construction jobs and those dependent on residential construction. Yesterday, they were unemployed, today many of them are going back to work.”
Rivinius said that studies show homebuilding produces profound economic and fiscal benefits in California.
“Building a new home in California generates on average about $16,000 in desperately needed tax revenues to the state treasury and creates anywhere from two to three jobs,” Rivinius said. “Getting an extension on the credit would be a win for the State and the entire economy.”
According to statistics compiled by the Construction Industry Research Board, builders pulled permits for 3,446 total housing units in June, up 17 percent from May. Permits for single-family units totaled 2,772 units, up 20 percent from May and was the largest single-family total since July of last year. Permits for multifamily units totaled 674, up 5 percent from the previous month.
“The Franchise Tax Board has stopped taking applications for the state tax credit for new home purchases as the allocated funds for the program have already run out in only four months,” Rivinius said. “The increase in single-family construction over the past couple of months has shown that the popular program is a success and we’d like to keep it going in hopes of continuing this positive momentum which will help invigorate the overall economy and help put people back to work.”
CIRB is forecasting permits will be pulled for just 40,000 total units in 2009, which would be by far the lowest total on record.