Bush signs law to stop US housing market slide

30 July 2008 22:04  [Source: ICIS news]

HOUSTON (ICIS news)--US President George Bush signed a law on Wednesday aimed at stopping the deterioration of the nation's housing market.

The housing industry is a key downstream consuming sector for chemicals and chemicals-based products such as roofing materials, adhesives, insulation, siding, paints and coatings, synthetic materials, polyvinyl chloride (PVC) pipes and a broad range of other construction materials.

The US housing market remains in a multi-year slump. In May, an index that measures house prices for 10 major US cities fell by a record 16.9%, according to the Standard & Poor's (S&P)/Case-Shiller Index.

The index's 20-city statistic fell by a record 15.8%.

The new housing law attempts to encourage house sales by providing a temporary tax credits to first-time house buyers.

The law authorises the Federal Housing Administration (FHA) to insure up to $300bn (€192bn) worth of mortgages. Another provision gives states the ability to issue an additional $11bn in mortgage revenue bonds - which should also slow down the rate of foreclosures.

The law also expands its line of credit to Fannie Mae and Freddie Mac, both of which either own or guarantee half of the mortgages in the US. It also allows the US Treasury to buy equities in the companies through the end of 2009.

The National Association of Home Builders (NAHB) said the legislation should end the housing downturn and strengthen the finance system.

“This milestone bill contains several provisions to get home buyers back into the marketplace, stop the slide in home prices, provide a lifeline to borrowers facing foreclosure, improve mortgage liquidity and bolster confidence in Fannie Mae and Freddie Mac,” according to a statement by Sandy Dunn, NAHB president.

Richard Gaylord, president of the National Association of Realtors, said the law should stabilise the market.

"More families will be able to refinance into safer, more affordable mortgages, in many cases helping those families avoid a devastating foreclosure," Gaylord said in a statement.

($1 = €0.64)

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