US home builders hail Congress for extended tax credit

05 November 2009 22:18  [Source: ICIS news]

WASHINGTON (ICIS news)--Congress on Thursday approved a six-month extension and expansion of the federal tax credit for home buyers, a move US home builders said will generate some 180,000 additional home sales by June 2010.

The US House approved a bill that extends payments for workers nearing the end of their unemployment benefits, and the measure also included an extension of the $8,000 (€5,360) tax credit for home buyers.

That tax credit, which went into force in February this year, was to expire at the end of November if Congress had failed to renew it.

The US Senate approved the measure late on Wednesday. With Thursday’s approval by the House, the bill now goes to President Barack Obama, who is expected to sign it into law shortly.

The extended housing tax credit likely will be welcomed by US chemicals and plastics manufacturers. The home building industry is a key downstream consuming sector for a wide variety of chemicals and resins.

Under the bill, the $8,000 tax credit will be available to first-time home buyers for use on personal residences purchased by the end of June next year.

In addition, the tax benefit was expanded to provide a $6,500 tax credit to existing home owners who want to buy a different residence.

Existing home owners must have been living in their current home for at least five years in order to qualify for the tax credit.

For both first-time buyers and existing home owners who are trading up, the credit is available only to individuals with incomes below $125,000 or married couples with annual earnings under $225,000.

The National Association of Home Builders (NAHB) hailed the congressional action, saying that the extended and broadened tax credit will continue “a powerful economic incentive”.

“Today’s action by Congress will further stabilise housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices,” NAHB chairman Joe Robson said.

NAHB said it estimates that the extended and expanded tax credit will generate 180,000 additional home sales.

Robson said the measure will help struggling home builders to stay in business and retain employees until the US economic recovery gains strength in the new year.

($1 = €0.67)

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