New CA Credit May Help, but Latest Builder Sales Are Down

Anecdotal reports from the field indicate that California's $10,000 state tax credit for new homebuyers has had a positive impact since it went into effect March 1, but sales in January by Golden State builders continued to limp along at a snail's pace. Sales in projects of 10 units or more were 64% below January 2008, according to the monthly report produced for the California Building Industry Association by Hanley Wood Market Intelligence. For the entire month, just 1,355 new houses and condominiums were sold in subdivisions tracked by the Costa Mesa-based HMWI, compared to 3,773 just 12 months earlier. The median price of the units sold fell 11%. According to CBIA president Robert Rivinius, production over the last three years has fallen from 209,000 in 2005 to 65,000 units 2008. Last year's total was the lowest level since 1954 when statewide records were first kept. CBIA says jobs generated by homebuilding fell from about 486,000 to about 123,000 during the period, while the impact the industry has had on the state's economy dropped from almost $68 billion in 2005 to a little over $23 billion in 2008.