05 February 2009 20:45 [Source: ICIS news]
WASHINGTON (ICIS news)--A massive federal stimulus bill now pending in the US Senate could stabilise the country’s long-troubled housing market by the middle of this year and start a recovery, national real estate officials said on Thursday.
Walter Malony, spokesman for the National Association of Realtors (NAR), said language approved earlier on Thursday for the $920bn (€718bn) economic stimulus bill “would significantly reduce housing inventory and stabilise prices”.
In an amendment vote earlier on Thursday, the Senate approved a provision that would give home buyers a tax credit of $15,000 or 10% of the purchase price, whichever is lower.
The tax credit would be available to any so-called primary home buyers, meaning individuals or families who buy a home and intend to live in it. The tax credit would not be available to investors buying homes on speculation.
“We’ve run some preliminary numbers on the basis of that $15,000 tax credit,” Malony said, “and we project that there would be an increase of home sales of more than one million units within a year.”
“That would significantly reduce the housing inventory and stabilise prices,” he said.
Housing market analysts say that until the inventory of existing homes for sale can be whittled down to a more normal four- to six-month supply, prospects for recovery in new home construction will remain dim.
The housing sector, especially new home construction, is a crucial downstream consuming industry for a wide variety of chemicals and resins.
“If the stimulus package is done quickly and in time for the seasonal upturn in home shopping beginning in March and April, you could see housing prices stabilise by mid-year,” Malony said.
The Senate also is considering additional housing sector incentives, including a possible federal subsidy for home mortgages that would make available fixed-rate housing loans at 4%.
The stimulus bill, which is larger and different in many ways from the $815bn package passed by the US House last week, also would provide tax cuts and health care subsidies as part of the economic rescue plan.
Congressional leaders have said they want the stimulus bill to be on President Barack Obama’s desk and ready for his signature by 13 February, the end of next week.
($1 = €0.78)
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