US housing starts in February snapped its streak of declines, increasing optimism in the market. Work began at an annual rate of 583,000 homes, a 22% increase from January.

I have seen an increase in homes on the market over the past few weeks, however, we are seeing the absorption rates declining as more homes are closing.  Many more people are aware of the $8,000 Federal Tax Credit that is available.

I think we are going to see a short term surge in home starts that will continue through the spring.  Any new home buyer needs to close before December 1, 2009 to be eligible for the $8,000 tax credit.  That means there  is a relatively short window if a home is being built to order.  Most home builders have low inventory and are not breaking ground until they have a deposit.  If it takes 6 months from the time you break ground to the move in date, contracts must be signed by June 1.  That leave potential purchasers only 76 days and counting to make up their minds.

 In another positive development, building permits increased 3% in February.  There is a sense, perhaps it is just hope that we have seen the bottom and that we are starting to turn the corner in the housing market.  One robin does not make a spring, so while we start to enjoy the warmer weather, we will be closely watching activity over the next few weeks to see if we are experiencing a true thaw.

 Take a look at the absorption rates.  Click HERE.