Builder confidence increases as construction of new homes rises in January

The federal tax credit program is a major component in the optimistic report

Builders are feeling a bit more positive and are looking toward the spring construction season to pump up sales of new single-family construction. The National Association of Home Builders reports that their market index survey results went up two points to 17, the highest level since November 2009. Regionally, the Midwest and South measured a two-point gain to 13.

NAHB chief economist David Crowe says that builders are beginning to see the results of the homebuyer tax credit combined with still low interest rates. Add the beginning of job stabilization and builders see their future with a sense of optimism.

Also on the plus side, housing construction posted an increase in January, rising to 2.8 percent with a seasonally adjusted annual rate of 591,000 units, according to the U.S. Commerce Department. That department also cites the tax credit program as a major influence for the positive uptake.

Tax credits of up to $8,000 for first-time homebuyers and $6,500 for repeat buyers will expire on June 30, 2010. To qualify the buyer must have a contract in force by April 30. Another set of tax credits is available through the stimulus program’s energy-efficient upgrades. Homeowners can receive up to a $1,500 tax credit for energy-efficient improvements, including exterior doors and windows, heating and cooling systems and insulation. That program expires on December 31, 2010.

On a statewide basis, Missouri is taking action to increase home buying with the $15 million Home Ownership Purchase Enhancement program (HOPE), which offers credits on a homebuyer’s real estate bill, up to $1,250. Energy efficiency also kicks in here; approved homebuyers may be eligible to receive an additional amount if they purchase a qualified, newly-constructed energy-efficient home; buy an existing home and remodel it; or purchase Energy-Star® appliances.

With all of these incentives, low interest rates and lower sale prices, now is the time to buy before April 30.


Written by Myra Vandersall