PrintAfter admitting twice that the July home sales numbers released last week were “clearly worse than we expected,” HUD Secretary Shaun Donovan did not rule out the prospect that the Administration will revive the homebuyer tax credit that expired April 30.
Sales of existing homes in July dropped 27.2 percent in July to the lowest rate in 15 years. U.S. new homes dropped in July to the lowest level on record, signaling that even with cheaper prices and reduced borrowing costs the housing market is retreating. Purchases fell 12 percent from June to an annual pace of 276,000, the weakest since the data began in 1963.
Donovan said on CNN’s State of the Union show yesterday that it is “too soon to say” whether the administration’s $8,000 first-time homebuyer credit tax credit, which expired April 30, will be revived.
“All I can tell you is that we are watching very carefully,” Donovan said. “We’re going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.”
After Donovan’s remarks, two out of the three Florida candidates for the Senate announced their support for reviving the tax credit. On the same CNN show that Donovan appeared on, Republican-turned-independent Florida Gov. Charlie Crist said reviving the tax credit “would be a great lift” that “would stimulate the economy, it would increase home sales in Florida.”
“I think any time you can reduce taxation in order to spur the economy forward, that’s a good thing to do and that would be great to do. I would absolutely encourage the president to support that because it would certainly help my fellow Floridians,” Crist added.
One of Crist’s opponents, Democratic Rep. Kendrick Meek, agreed and said he “absolutely” wants to see the credit extended.
Many housing economists attribute the fact that consumers moved up their home purchases so that they could take advantage of the credit, leaving a dearth of buyers which contributed to unexpectedly low sales in subsequent months.
August 30th, 2010 at 1:45 pm
Spending more taxpayer money to temporarily prop up housing prices (again) makes no sense. What is wrong with housing prices falling to their organic market bottom? What the banks will fail? That is what is supposed to happen when a bank (or any business for that matter) makes a bunch of stupid decisions - they fail. Eventually, this housing market propping is going to end and there will be millions of homeowners who are underwater as a result of this stupid tax credit.