RateAPY

New Home Investments Jump To 1 1/2-Year High In April

Posted by: RateAPY Bank Rates News
May 18th, 2010

According to the Commerce Department’s U.S. Census Bureau, home starts were up 5.8% in April and up 40.9% from the same time last year. Home start statistics show that consumers were making investments in new residences, creating jobs during the building phase. Most likely this surge was due to the tax credits of up to $8,000 offered by the government. Now that the tax credits have expired, new home starts will likely drop again.

Building permits are the leading indicator that show what is likely to happen to housing starts in the future. Permits for new housing fell 11.5% in April, but are still up 15.9% over the same time last year. This drop in permits predicts a drop in new home starts (residential investments) in the coming months.

Today’s low mortgage rates will help housing. But if permits and starts drop sharply, the government may consider bringing back the tax credits for purchases of residential investments.