(snip)"WASHINGTON - Home construction plunged last month and building permits also fell, the latest signs that the construction industry won't fuel the economic recovery.
Builders are scaling back now that government incentives have expired. The biggest evidence of that trend: single-family homes tumbled 17 percent, the largest monthly drop since January 1991. The struggle in the housing industry is a concern for the broader economy because fewer homes mean fewer jobs across various sectors.
Overall new homes and apartments fell 10 percent in May to a seasonally adjusted annual rate of 593,000, the Commerce Department said Wednesday. April's figure was revised downward to 659,000. Applications for new building permits — a sign of future activity — sank 5.9 percent to an annual rate of 574,000. That was the lowest level in a year.
"The tax credit was never intended to be a permanent driver of housing activity and has simply shifted sales forward," wrote James Marple, senior U.S. economist with T.D. Bank. "Sales will almost certainly fall in the months ahead and take some steam out of housing recovery." "(snip)
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The important take-away is that the US taxpayer funded first time home buyer / new home buyer tax credits were responsible for slowing an earlier decline in new home sales and home prices. Now that the tax credit has expired, the US housing market is arguably returning to its 'real' level ... which is much lower. Additionally, it appears that these tax credits artificially 'sucked' future new home purchases forward to take advantage of the 'free' US taxpayer money ... meaning that actual future new home purchases will be even further reduced.



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