Demand for new homes slipped again in August, a decline California homebuilders attributed to the discontinuation of the successful state homebuyer tax credit program, the California Building Industry Association announced today.

“The significant drop in traffic in July due to the state closing out the successful tax credit program continued in August, holding down new-home starts and, correspondingly job creation,” said Liz Snow, CBIA’s president and CEO.

According to statistics compiled by the Construction Industry Research Board, homebuilders pulled permits for 2,911 total housing units in August, down 5 percent from July. When compared to August of last year, production in 2009 was way down.

“When it was in effect, the tax credit was beginning to turn things around,” said Snow. “Since the program stopped in July-only four months after it started – activity dropped off dramatically.”

The homebuyer tax credit was authorized by the Legislature in February of this year to restore confidence and activity in housing markets and to help move the state out of its economic doldrums. The credit proved to be more popular than anyone expected, and by mid-year the credits were all gone.

Snow noted that after the credit was enacted, homebuilders reported a substantial increase in traffic at their new-home communities, which led to an immediate increase in sales, and in turn, new home starts.

“The tax credit proved to be successful in serving its purpose which was to generate activity and restore confidence in housing markets,” said Snow. “We’re asking the Legislature to enact an extension of the program and help continue the positive momentum it has generated.”

CIRB is forecasting permits will be pulled for just 39,500 total units in 2009, which would be by far the lowest total on record.

“Studies show that homebuilding produces profound economic benefits in California,” said Snow. “Getting an extension of the credit would be a win-win for our state and would go a long way towards putting people back to work, generating much needed tax revenue for state and local coffers, and boosting our overall economy.”