New home construction as well as building permit applications declined in May, according to the Commerce Department. Many economists believe that the reason for the fall is the expiration of the Government programs which have been fueling the real estate market, in the spring.
According to James Marple, Senior US Economist, "Sales will almost certainly fall in the months ahead and take some steam out of housing recovery." The struggling market affects many different industries. The National Association of Home Builders (NAHB) claims that every new home that is built creates 3 jobs for a year, nearly $90,000 in taxes for authorities as well as income for every industry from faucet factories to appliance companies. This loss of income affects the entire economy of the country.
The expiration of the Homebuyer Tax Credit in March has in turn affected the enthusiasm of potential homebuyers. The Homebuyer Tax Credit, a Government program,offered a tax credit to qualified first time homebuyers of up $8,000 and $6,500 for homeowners purchasing another home. A stipulation to the program insisted that homebuyers have contracts signed by April 30th of 2010 and that the deals must be closed by June 30th. The government is pushing for an extension of the credit allowing homebuyers extra time for closing deals as the National Association of Realtors (NAR) has estimated that over $100,000 homebuyers will be unable to close their deals by the end of this month.
A result of the expiration of the Homebuyer Tax Credit is the lack of confidence that homebuilders are suffering from as they are anticipating home sales will slow down during the second half of 2010.
