California tax credit expires, home permits sink

SAN FRANCISCO (Reuters) - Homebuilding permits filed in California in July fell significantly from June as a state tax credit for buyers of new homes expired, a homebuilders group said on Monday.

The group also said the number of new homes built in the most populous U.S. state would sink to a record low this year.

California has been hit hard by the housing downturn which, combined with a foreclosure glut and tight mortgage credit, have hammered the state’s homebuilding industry.

The tax credit offered earlier this year pulled homebuyers from the sidelines back into the state’s beleaguered market for new homes but they have retreated since the incentive lapsed last month.

“Our homebuilders reported a significant drop in traffic last month, largely due to the state closing the window on the homebuyer tax credit,” said Robert Rivinius, president and chief executive of the California Building Industry Association.

He noted the state government stopped taking applications for the $10,000 new-home credit at the beginning of July.

“Activity stopped as quickly as it started, which is bad news for housing and the broader economy,” Rivinius said.

Citing data compiled by the Construction Industry Research Board, Rivinius’ group said in a statement that in California in July there were permits for 3,011 total housing units, down 14 percent from June.

“Permits for single-family homes totaled 2,045, down 29 percent from June when builders pulled permits for 2,864 units, the highest monthly tally since July of last year,” the group said in its statement.

The statement added that the Construction Industry Research Board revised its forecast for total new housing units that will be built this year in California to 39,500 from 40,000, which “would be by far the lowest total on record.”

Reporting by Jim Christie in San Francisco; Editing by Richard Chang