In less than one month, $16.6 million of the $100 million set aside for California's new construction home buyer tax credit has been spoken for. At this pace, funds for the $10,000 state income tax credit will depleted before the summer is over.
K. Hovnanian Homes has reported a 25% increase in visitor traffic in March, but builders throughout the state are reporting that the vast majority of buyer activity is taking place in more entry-level developments. Half of the new homes placed under contract this year are priced below $300,000.
New home sales continue to lag behind last year's pace, as resale foreclosures continue to be the primary magnet for investors and first-time buyers, but the $10,000 tax credit and aggressive marketing campaigns should help jumpstart new construction.
There were only 65,000 new homes built in California last year, the lowest number since the state began keeping records in 1954.
