Even with the state kicking in a tax credit of its own, home builders in the Golden State did not weather very well the end of the federal homebuyer tax credit.
According to the latest count by the California Building Industry Association, sales in projects of 10 units or more were down 46% in May. Just 1,745 houses and apartments were sold during the month vs. 3,200 in May 2009.
Jonathan Dienhart, director of published research for Hanley Wood Market Intelligence, the Contra Costa-based consulting firm which does the counting for the CBIA, said the end of the tax credit came "with a harsh reality check for housing."
The researcher said he is hopeful California's new home sector will stabilize in the coming months. But CBIA President Liz Snow said consumers need to regain confidence in the state's economic situation before that will happen.
"Consumers are exercising more caution when it comes to big purchases," Snow said. "Confidence in job security and the overall economic recovery must be restored before we see any lasting improvement in new-home sales."
CBIA officials are hoping that the state tax credit for new homebuyers will lead to improved sales numbers in June and subsequent months. As of July 13, the Franchise Tax Board has taken more than 9,600 applications and reservations for the credit. "We hope this is a sign that will point to some more stable numbers in the coming months," Snow said.
