Industry Groups Urge 12-Month Tax Credit Extension
The Mortgage Bankers Association (MBA), and the National Associations of Realtors (NAR) and Home Builders (NAHB) issued a joint letter encouraging the federal government to extend the first-time homebuyer tax credit. Noting Internal Revenue Service (IRS) data that shows as of August 2009, more than 1.4m taxpayers have taken advantage of the tax credit, the trio of trade groups called for a 12-month extension of the tax credit. They also urged an expansion of the credit to include all purchasers of principal residences, increase the amount of the credit and provide funds for closing costs. “Our fragile economy is just beginning to show signs of recovery. We should not jeopardize that recovery by letting this tax credit expire,” said the letter, sent to the White House and the secretaries of the departments of Treasury and Housing and Urban Development (HUD). “Problems in the housing industry led us into a global recession, and housing incentives can help lead us out of the recession.” The trade groups said the tax credit contributed to a decline in the volume of new homes on the market and brought a better balance to the nation’s inventory, which is currently at a seven-month supply, down from 12.4 months in January 2009. The supply of existing homes on the market is now at 8.5 months, down from 10.6 in November 2008. A balanced market, the groups said, is a six-month supply. The groups also pointed to a NAHB study that indicates buyers of newly constructed homes spend an average $12,332 on additional goods and services after the purchase. Buyers of existing homes spend $8,927. Money is spent in three primary categories — property repairs and alterations, appliances, and furnishings — and NAHB estimates this spending associated with home purchases has led to the creation of 187,000 jobs since the tax credit was introduced. The trade groups said extending the tax credit would provide additional stimulus to other sectors of the economy. Write to Austin Kilgore.