The California Building Industry Association is blaming a sharp decline in home construction from June to July on the discontinuation of the state’s $10,000 tax credit for new-home purchases.

California builders pulled 2,045 permits to construct single-family homes in July, down 29 percent from June and 36 percent from the same month a year ago, CBIA said, citing statistics compiled by the Construction Industry Research Board (CIRB). CIRB is now projecting builders will construct just 39,500 total housing units in California this year, the lowest total on record.

CBIA is urging state lawmakers to expand a $100 million program that, beginning in March, provided tax credits of up to $10,000 on the purchase of a newly built home.

The California Franchise Tax Board stopped accepting requests for the credit on July 2, after taking more applications than it could possibly fund. As of Aug. 19, the board had allocated $98.76 million in credits to 10,527 homebuyers, or an average of $9,382 each. At that rate, the remaining $1.24 million to be allocated will provide credits to only about 132 additional homebuyers.

Unless lawmakers expand the program, about 1,500 of the 12,138 applications received by the July 2 cutoff won’t be funded. The board said it accepted more applications than the program could fund because it expected many would be duplicates, revised or invalid.


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