Thursday, November 29, 2012

New Home Construction Stalled at Edge of Fiscal Cliff

After a slew of positive readings on the nation’s housing recovery, sales of newly built homes were a big disappointment.

Despite the big public builders reporting big jumps in new orders and builder confidence positively leaping to the highest level since 2006, sales just don’t compute, and even September’s numbers were revised down.

A big concern for home builders now is the looming fiscal cliff. The housing recovery depends on the economic recovery and continued improvement in the jobs picture. There is also great concern that the mortgage interest deduction could fall victim to the cliff.

That’s why housing lobbyists have upped their budgets this year to $30 million from $27 million in 2011, according to the Center for Responsive Politics. The National Association of Realtors leads by far with a record $25,982,290 spent on lobbying so far.

Fears of the fiscal cliff could be impacting potential buyers already. The new home sales monthly number from the U.S. Department of Commerce is based on signed contracts, not closings, so it is a clear gauge of what potential buyers are feeling right now.

“It is making me nervous for sure to have such uncertainty over such a traditional expectation, the mortgage deduction,” says Stephen Paul, of Mid-Atlantic Builders, a Maryland-based company. Paul says he hasn’t seen any cancellations over it yet, but it has come up in conversation plenty.

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