According to a recent report from CNN Money, home construction has slowed. The report notes that housing starts fell by 10% last month, a decline that surprised some analysts who had been more optimistic earlier in the year.
One factor behind the slowdown appears to be the expiry of federal tax incentives. April was the final month for first-time buyers to qualify for a tax credit of up to $8,000. Lawmakers also briefly extended a related incentive that offered up to $6,500 for some existing homeowners who sold and bought another home, but those provisions have now ended. Researchers say those credits had pulled construction and housing activity forward, and with their expiration the market is experiencing a natural cooldown that may continue through the summer.
Despite the near-term weakness, there are signs that activity could pick up later in the year. Ian Shepherdson, chief economist at High Frequency Economics, told CNN Money he expects a rebound in housing starts by the fall, driven by improving economic conditions and renewed buyer interest.
Have you begun or paused a construction project because of tax incentives?
Photo: Lee Coursey