WASHINGTON, Sept. 25 -- Following four months of solid gains, sales of newly built, single-family homes edged up by less than one percent in August as the window for an important buyer incentive began to close, according to data released by the U.S. Commerce Department today. Sales posted a meager 0.7 percent gain to a seasonally adjusted, annual rate of 429,000 units for the month.
"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 National Association of Home Builders (NAHB) Chairman Joe Robson, a home builder from Tulsa, Okla. "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 today's 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 7-month supply at the current sales pace. That 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 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. 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.
On a regional basis, new-home sales were somewhat mixed in August. A 12 percent gain in the West was entirely responsible for pushing the overall number upward, while the South posted no change from the previous month and the Northeast and Midwest each recorded declines, of 16.3 percent and 5.8 percent, respectively.