The National Association of Home Builders today called on Congress to pass a housing-rescue package that would include a generous homebuyer tax credit to spur sales in a continuing weak market. NAHB CEO Jerry Howard pushed lawmakers to include a homebuyer tax credit in the final package despite White House signals against the language. "That tax credit needs to be as big and as unencumbered and as rapid-acting as Congress can make it, so as to stimulate home-buying during this summertime home-buying and homebuilding season," Howard said, noting his industry has lost 324,000 jobs over the last five months due to the market downturn. "The housing economy is hurting. The overall economy is starting to hurt."
Howard made the comments after his group reported that its home-market index reached a record low this month. Debate over the homebuyer tax credit is one of the lingering issues that negotiators are attempting to resolve in a quest to finish before the Fourth of July break, with much of the housing industry lining up behind it as a key ingredient to boost the sector. Howard's comments show that he favors the House approach to the tax break. The House-passed bill would provide first-time homebuyers a refundable tax credit of 10 percent of their purchase price up to $7,500. The credit, costing $3.8 billion over 10 years, would act essentially as an interest-free loan as borrowers would be required to pay the amount over 15 years. The tax credit would be phased out for individuals with adjusted gross income over $70,000, or $110,000 for couples.
While Congress appears to favor the inclusion of some type of homebuyer tax credit, the Bush administration has not embraced the concept. In a Statement of Administration Policy, the White House expressed opposition to the House provision, saying that it would be complex and burdensome for taxpayers and create administrative nightmares. In contrast, the Senate-passed version is more limited, providing for a $7,000 tax credit for purchasers of properties that are in foreclosure. That tax break, sponsored by Sen. Johnny Isakson, R-Ga., would apply only to owner-occupied homes and have to be claimed over a two-year period, at a cost of $1.6 billion. The National Association of Realtors is lobbying for more expansive language, asking that the tax break apply to all residential properties and that the income limits under the House bill should be increased, especially for single filers.
This article appears in the June 21, 2008, edition of National Journal Daily PM Update.