Senators eye extending home credit to end of April
2009-10-28

Nations U.S. States Nevada Category Regions People Mitch McConnell Harry Reid Event 111th Congress 2008 U.S. Real Estate Crisis Source (Reuters)

WASHINGTON (Reuters) - The U.S. Senate's top Democrat and top Republican each voiced support on Wednesday for extending and expanding a soon-to-expire tax credit aimed at boosting the fragile housing market, though a vote on the measure could be delayed until next week.

Key senators agreed to extend the $8,000 first-time homebuyer tax credit, which expires at the end of next month, through April of next year, sources familiar with the matter told Reuters.

A spokeswoman for Senate Majority Leader Harry Reid said the deal would also allow for those who have been in their home for at least five years to receive a $6,500 tax credit if they purchase a new primary residence.

She also said the credit would be available for individuals making up to $125,000 a year and couples earning up to $250,000 per year, raised from $75,000 and $150,000, respectively, in the current tax credit.

"There has been general agreement by a significant number of senators, Democrats and Republicans, to get this done," Reid, a Nevada Democrat, said on the Senate floor. Nevada has been hard-hit by the bursting of the housing bubble.

The chamber's top Republican, Senator Mitch McConnell, also said most senators support the measure. "I certainly share his view," McConnell said.

TIMING OF A VOTE UNCERTAIN

While extending the credit enjoys widespread support, its fate is caught up in a spat between Reid and McConnell over unrelated issues.

Reid wants to attach a bill to extend the homebuyer credit as an amendment to legislation to lengthen insurance benefits for unemployed workers.

The Reid spokeswoman said the unemployment insurance measure could get pushed to next week as lawmakers try to resolve differences over unrelated issues, which would delay consideration of the homebuyer credit extension.

"We will get this extension passed," she said.

A report last week showed sales of previously owned homes hit a two-year high in September as buyers rushed to take advantage of the credit before its expiration date. However, a report on Wednesday showed new home sales, a much smaller segment of the market, tumbled unexpectedly last month.

Separately, a report from the Mortgage Bankers Association on Wednesday that demand for mortgages has fallen for the past three weeks as buyers move to the sidelines.

A buyer would have to close on the purchase of a home before November 30 to take advantage of the current tax credit. (Additional reporting by Lisa Lambert; Editing by Leslie Adler, Gary Hill)