Obama Administration Mulling Over Revival of $8,000 Home Buyer Tax Credit Program

Obama Administration Mulling Over Revival of $8,000 Home Buyer Tax Credit Program

Residential News » Residential Real Estate Edition | By Michael Gerrity | August 30, 2010 9:54 AM ET

Housing and Urban Development (HUD) Secretary Shaun Donovan said in an interview on CNN this past weekend that the Obama administration is closely watching the U.S. housing market, and while it may too soon announce anything, the Obama administration is mulling over reviving the $8,000 first-time homebuyer credit tax program, which expired April 30, 2010.

"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."

Florida Governor Charlie Crist said on CNN that "reviving the tax credit program would help enormously in the effort to fight foreclosures and revive the economy." Florida has the third-highest home foreclosure rate in the country, with one in every 171 homes receiving a foreclosure filing in 2010.

Donovan also said in the same CNN interview that HUD plans to set up an emergency loan program for the unemployed and a government mortgage refinancing effort in the next few weeks to help homeowners after home sales dropped in July.

Donovan further commented, "The July numbers were worse than we expected, worse than the general market expected, and we are concerned, that's why we are taking additional steps to move forward."

The administration will begin a Federal Housing Authority refinancing effort to help borrowers who are having problems keeping up with their mortgages, and will start an emergency homeowners' loan program for unemployed borrowers so they can stay in their homes.

"We're going to continue to make sure folks have access to home ownership," he said.

As sales of U.S. new homes unexpectedly dropped in July to the lowest level on record, a retreat back to even cheaper home prices are expected by many analyst. Purchases fell 12 percent from June to an annual pace of 276,000, the weakest since the data began in 1963.

Sales of existing houses plunged by a record 27 percent in July as the effects of a government tax credit waned, showing a lack of jobs threatens to undermine the U.S. economic recovery.

Home sales plummeted to an annual pace of 3.83 million, the lowest on record and far worse than the most Wall Street analysts expected. Demand for single-family houses dropped to a 15-year low and the number of homes on the market swelled.

U.S. home prices fell 1.6 percent in the second quarter from a year earlier as record foreclosures added to the inventory of properties for sale. The annual drop followed a 3.2 percent decline in the first quarter, the Federal Housing Finance Agency said last week.

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