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WASHINGTON: US lawmakers were urged on Oct 7 to extend the US$8,000 (RM27,000) first-time homebuyers credit past its Nov 30 expiration date, even as sales of new homes grew in August to the highest rate in almost a year.
Witnesses at a House Small Business Committee hearing called upon the US Congress to expand the credit to all homebuyers, not just newcomers to the market.
“The extension and expansion of the first-time homebuyer tax credit is the single greatest step Congress can take to stimulate the housing market,” said Mike Pryor, president of the American Land Title Association, in a prepared testimony.
The US Commerce Department reported on Sept 25 that new home sales rose in August to an annual rate of 429,000 units, the highest since September 2008. Goldman Sachs Group said Sept 24 that it expected home sales to continue to rise, assuming the tax credit is extended. Moody’s Investor Services said Sept 30 it expected housing prices to decline in the wake of high unemployment and increasing foreclosures.
“It has become increasingly clear that the health of our economy hinges on the state of the housing market,” said Representative Nydia Velazquez, a New York Democrat who heads the Small Business panel. “We’re seeing promising results. But our momentum remains fragile and we need to be sure it is allowed to continue.”
US President Barack Obama’s administration plans to take a “careful look” at extending the credit, US Treasury Secretary Timothy Geithner said Sept 17.
Joe Robson, president of the National Association of Home Builders, said the credit has created 187,000 jobs in construction, sales and other businesses that benefit from an increase in consumer spending due to smaller-than-expected housing costs.
“The economic stimulus created by established households moving into new homes and the added construction necessary to answer demand where there is no excess supply generates jobs, wages, salaries, business income and tax revenues,” Robson said in his prepared testimony.
Others expressed concern that any growth in the housing market could be reversed. Joseph Canfora of East Islip, New York, a vice-president of the National Association of Realtors, said that lenders who temporarily withheld foreclosed homes from the market may put them up for sale, that continued high unemployment may cause others to lose their homes and that many adjustable rate mortgages are due to reset.
“The threats of more foreclosed property coming to market, combined with the mortgage rate resets and growing unemployment are simply too great to take a wait-and-see approach,” Canfora said in a prepared testimony. – Bloomberg LP
