WASHINGTON – Construction of homes surged in April to the highest level in 18 months, fueled by buyers capitalizing on an expiring tax credit. Permits for new construction sank, signaling the rebound could fade.

Low mortgage rates and two tax credits — up to $8,000 for new buyers and $6,500 for owners who buy and move into another home — have boosted home sales this year. To get a credit, borrowers had to have a signed offer by April 30 and must close the deal by June 30.

The rate of home building has now risen more than 40 percent from the bottom in April 2009, though it’s still down 70 percent from the decade’s peak in January 2006.

Without the tax credit, analysts say home sales will slow in the second half of this year. High unemployment and tight lending standards will likely help keep many buyers away.

The report Tuesday from the Commerce Department said the rate of construction of single-family homes and apartment buildings rose 5.8 percent last month to a seasonally adjusted annual rate of 672,000. That was up from an upwardly revised March level of 635,000. The rate, the highest since October 2008, was driven by a 10 percent rise in single-family home building.

The government said building permits, a gauge of future activity, sank 11.5 percent to an annual rate of 606,000 — the lowest since October 2009.

Still, a survey Monday showed homebuilders are more optimistic. The National Association of Home Builders said its housing market index, which tracks industry confidence, rose 3 points this month to 22, the highest since August 2007. Readings below 50 indicate negative sentiment.


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