The Obama administration has not decided whether it should resurrect a popular tax credit for first-time homebuyers, Housing and Urban Development Secretary Shaun Donovan said on Sunday.
“It’s too early to say whether the tax credit will be revived,” Donovan said in an interview on CNN’s “State of the Union” program. He said the administration would “do everything we can” to stabilize the shaky U.S. housing market.
A federal $8,000 homebuyer tax credit, which expired several months ago, had boosted home sales, helping to revive a flagging housing market that had been a key factor in driving the United States into recession.
It followed a $6,500 credit for those purchasing a new primary residence, which also has expired.
But an unexpectedly large drop in U.S. home sales in July — sales of existing homes in the period fell to their slowest pace in 15 years — has spurred fears that the nation could be on the cusp of another sharp drop in housing.
Donovan acknowledged the data was worse than the Obama administration expected but said the government was taking measures, including rolling out a refinancing program for some borrowers and an emergency loan program for the unemployed.
Those opposed to bringing back the homebuyer tax credit say it would blow a bigger hole in the federal deficit, while supporters see it as key to stabilizing a pillar of the economy that faces headwinds despite low mortgage interest rates.
“I think it would help enormously,” Florida Governor Charlie Crist, who is running as an independent for the U.S. Senate in the November elections, told CNN. “I would absolutely encourage the president to support that.”
One of Crist’s challengers, U.S. Representative Kendrick Meek, a Florida Democrat, said he also supported reviving the tax credit.
Last month, Obama signed a law giving consumers already in the process of buying a home three extra months to close the deal and still get the tax credit.
Homebuyers with contracts signed by April 30 who failed to go to closing by the original June 30 deadline will now have until September 30 to complete their purchases.
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