Housing: Good News and Caution Jun 1, 2010

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National Association of Home Builders Chief Economist David Crowe said the jump in U.S. housing starts in April was likely not due to the expiration of the home buyer tax credit.

Writing in NAHB's Eye on the Economy, Crowe noted that, in order to get the tax credit, the homes would have to close at the end of June, allowing for just 3 months construction time instead of the average of five months.

"This would suggest that most of the increase was attributable to rebuilding inventory depleted as a result of the tax credit stimulus," Crowe reported.

April housing starts rose 5.8% from March to a seasonally adjusted annual rate of 672,000 units, the highest level since October 2008. The increase was attributable entirely to single-family homes, which were up 10.2% to 593,000 units.

Builders optimism continued to grow in April, according to the May NAHB/Wells Fargo Housing Market Index (HMI), up three points from 19 to 22, its second monthly increase in a row. Notably, all three components of the index (current traffic, current sales, and expected sales) were also up for the second consecutive month.

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