SACRAMENTO -- The pace of home sales at California new-home communities continued to show signs of stabilization in April thanks in part to the new-home tax credit that went into effect in March, the California Building Industry Association reported today.
The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New Home Sales and Pricing Report showed that sales in new-home communities of 10 units or more were still 31 percent below April 2008, but that represents an improvement from the 44 percent decline in the prior month and is the third consecutive month of that improvement trend.
During April, 2,771 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 3,989 in April 2008. Sales of single family homes were down by 32 percent, while sales of townhomes and “plexes” – duplexes, triplexes, etc. – were down 17 percent and sales of condominiums were off by 32 percent. Compared with the same period last year, the median base price of homes sold dropped by 10 percent.
Non-seasonally adjusted total new home sales were 7 percent higher than levels seen last month. This is an improvement from a year ago when the March-April interval was a decline of 9 percent. While sales volume is still approximately one third off year-ago levels, the steadily shrinking year-over-year sales declines suggest the market is stabilizing.
Jonathan Dienhart, Director of Published Research for HWMI, notes the figures from April are encouraging.
“We’re definitely headed in the right direction,” Dienhart said. “Aggressive pricing by builders and tax incentives seem to be helping stabilize the pace of new home sales despite substantial competition from the resale market in the form of foreclosures.”
Robert Rivinius, CBIA’s President and CEO, agreed and added that the continued month-to-month increase in new-home sales is a clear indication that the state tax credit is having the desired effect in helping to jump-start the housing market and hopes state lawmakers will recognize this when taking up legislation to extend the credit.
“Since the state credit went into effect on March 1, more than 8,500 buyers have taken advantage of the program with applications for the credit totaling more than $82.5 million in only three months,” Rivinius said. “The tax credit is clearly working better than anyone thought – increasing home sales and new construction starts. And, that means jobs.
“But, the good news is becoming bad news as there are only a few tax credits left. To keep the momentum going it’s critical that the Legislature and the Governor act quickly to renew the credit. Historically, the housing industry is what leads the nation out of recessions, and if given more time, we believe the tax credit will help the industry recover, and in turn the overall economy, much more quickly than it otherwise would.”