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New home construction has seen a phenomenal growth of 41% in April in comparison to last year’s performance as per government report which was released Tuesday.
New house construction increased to a seasonally adjusted annual rate of 672000 last month as per Commerce Department with economists expecting housing starts going up to 655000.
Single family homes construction grew by 10.2% over the month to an annual rate of 593000.
Sales of first time home buyers could avail of a federal tax benefit of upto $8000. Lawmakers had also extended the deadline through April 30 and added a new credit of up to $6500 for existing home owners who decide to move.
"The increase in demand prompted by the tax credit has lifted construction," wrote Ian Shepherdson, economist at High Frequency Economics, in a research note.
"But the expiration of the credit ... has made homebuilders wary about continuing to add new homes during the summer," he said.
Applications for building permits sank in April to a seasonally adjusted annual rate of 606000 last month. Economists were expecting upto 680000 permits but were still up 15.9% as compared to April 2009.
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