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Housing Data Hints That Housing Will Expand Even After The Tax Credit Expires

By
Mortgage and Lending with Company 12345

Housing Starts Apr 2008-Mar 2010After a strong March showing and a surprise upward-revision for February, Housing Starts are, once again, trending better.

It’s yet another signal that the housing market in Texas and nationwide is stabilizing.

A Housing Start is a new home on which construction has started and, over the last 6 months, home builders are averaging one half-million starts per month.

This marks the highest 6-month average since 2008 and a reading one-fifth percent better from 12 months ago. Revisions to prior data have all been higher, too.

Even more interesting, though, is that the number of newly-issued building permits is exploding. Permits were up more than 5 percent last month and have climbed back to the levels of late-2008.

Housing permits are an important data point in housing because permits are precursors to actual housing starts. According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

Therefore, because March’s housing permits increased, we should expect Housing Starts to continue to rise into the early months of summer.

This, too, reflects well on housing because the federal home buyer tax credit won’t be in existence this summer. The simple fact the homes are being built now shows that housing is likely to expand even after the tax credit expires.

Non-military members must be under contract by April 30, 2010 and closed by June 30, 2010 in order to claim up to $8,000 in federal tax credits.

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Tommy (NMLS #220122) is an active loan officer with AmCap Mortgage specializing in FHA loans. You can also find him on Google+ and Twitter. Over the past 10 years, he's provided home buying strategies and advice to thousands of homeowners. He's kinda like the Chuck Norris of FHA loans.

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Comments (4)

Susan Brown
Keller Williams NE, Kingwood Texas (Humble & Atascocita too) - Kingwood, TX

Tommy, That would be great if the housing market does indeed continue to improve.

Apr 20, 2010 01:51 AM
J Perrin Cornell
Coldwell Banker Cascade Real Estate - Wenatchee, WA
Broker, ABR, VAMRES

Perhaps some starts may be driven (especially permits) by uncertainty itself. Don't want to miss out. Also some may be driven by survival... need more starts, if we can get them, to keep surviving, they may not be THE sign we would normally hope for.

Apr 20, 2010 01:57 AM
T Chumba
Company - Arctic Bay, NU
Your dog

While there are no certainties, if you mix this data in with the rising foreclosure rate, one way or another, it is going to soften the blow of the tax credit going bye-bye and push sales higher this year.

Apr 20, 2010 02:07 AM
Lois Davies
Century 21 Birchwood Realty, Inc. - Cape Coral, FL
Cape Coral & SW Florida

There is an old saying "from your mouth to Gods ears"; I hope you are right about the upswing.  I don't think the tax credit going bye-bye is going to have a drastic effect on the market, prices being low and the exceptional values homes are being sold for will mean more.  But like you I agree, there are no certainties.

Apr 20, 2010 06:02 AM