Facing mounting concerns over the bleak outlook for jobs, more lawmakers on Capitol Hill last week showed interest in extending and possibly expanding the $8,000 first-time home buyer tax credit that is set to expire on Nov. 30.
However, political observers at NAHB cautioned that renewing the popular credit is still far from a done deal, with a number of lawmakers reluctant to act unless Congress imposes offsetting tax increases or spending cuts.
"After Senate Majority Leader Harry Reid (D-Nev.) and House Speaker Nancy Pelosi (D-Calif.) expressed a willingness for Congress to move on the tax credit, we have seen encouraging developments in recent days," said NAHB Chairman Joe Robson.
"With rising unemployment a top concern among lawmakers," Robson said that House Democratic leaders were planning to convene a forum of economic experts during the week of Oct. 19 to discuss how to spur job creation and economic growth. "The home buyer tax credit proposal is expected to be in the mix," he said.
Meanwhile, Sens. Johnny Isakson (R-Ga.) and Christopher Dodd (D-Conn.) were planning to offer an amendment extending and expanding the credit to a House-passed bill that would extend unemployment insurance benefits. Though it is unclear if the Senate will act on this proposal, NAHB will be urging senators to approve the amendment if it comes up for a vote.
The Isakson-Dodd proposal would extend the credit to June 30, 2010 and expand it to a wider circle of principal home buyers. It would also double the current income eligibility phase-outs to $150,000 for single taxpayers and $300,000 for married taxpayers filing a joint return.
Reporting on the Isakson-Dodd plan, the Associated Press cited NAHB statistics that extending the credit for one year and expanding it to all buyers of a principal residence would spur 383,000 additional home sales, create more than 347,000 jobs and generate $16.1 billion in wages and salaries and $12.1 billion in business income.
Jobs a Top Voter Concern
Unemployment rose last month to 9.8% and economists have been warning that it could exceed 10% even as the economy tentatively begins to generate growth. Over the longer term, it could take years to replace the six million jobs that have been lost during the recession, including one million in residential construction and related fields.
At a time when the White House and Congress have been largely preoccupied with overhauling the nation's healthcare system, jobs have quickly emerged as a top issue among voters.
Eighty-one percent of the registered voters surveyed by Hart Research Associates between Sept. 21 and 23 for the Economic Policy Institute said that the Obama Administration still needs to do more to deal with the loss of jobs.
The survey found that because the pain of the recession has struck so close to home, Americans strongly support continuing government action to address unemployment.
Fifty-seven percent of those polled said they were close to someone who has been laid off, 61% reported that someone close to them has had their hours or pay cut and 44% of all households have experienced one or the other during the past year.
Of those participating in the Hart research poll, 83% saw unemployment as a big problem today, and 61% said that unemployment would remain a major challenge a year from now.
In their analysis of the impact of NAHB's proposal to use the home buyer tax credit to strengthen housing demand and promote economic recovery, economists at the association noted that the increased home purchases generated by the proposal would help soak up the excess supply of unsold homes and push prices back in a positive direction.
While the last few months have seen encouraging signs that the housing market is stabilizing from its most severe downturn in many generations, foreclosures remain a serious threat to the momentum that the housing market needs to move forward.
"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, generate the jobs, wages, salaries and business income and the tax revenues" resulting from a tax credit extension, the NAHB economists wrote. "As well, these economic impact estimates do not include the larger macroeconomic benefits that would result from the stabilization of housing prices and the housing market in general."
Exploring some current attitudes toward the housing market, Fallon Research & Communications on Oct. 14 said that, "Americans seem to be acutely attuned to the inexorable relationship between the housing industry and the national economy." Forty-five percent of those polled in the Fallon survey said that the real estate industry and housing market are very important to the national economy, and another 48% agreed that they are somewhat important.
Economist John Burns, of John Burns Real Estate Consulting, who appeared at NAHB's spring board meeting in Washington on a panel of experts discussing the housing outlook, noted that creation of the housing tax credit is among the steps taken by the government that can be credited with halting a further decline in housing demand this year.
"Demand needs to continue to be stimulated to bring down supply, particularly while the country continues to lose jobs," Burns said. "Without continued government intervention, home prices will plummet, banks and the GSEs will continue to lose money and the economy has virtually no chance of increasing overall employment in 2010."
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