New Homebuyer Tax Credit: Coming Soon?

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The rumor mill is bubbling with reports that Uncle Sam is ready to take another whack at the housing market piñata, this time with a fresh version of last year’s homebuyer tax credit.

The media scuttlebutt may be premature, if not incorrect.

According to U.S. Housing and Urban Development Secretary Shaun Donovan – the federal government’s chief housing executive – it’s all news to him.

"It is not high on anyone's list that we have heard. We have not heard Congress talking about renewing it," Donovan said in response to a reporter’s question on Wednesday.

It’s risky to read between the lines, especially in Washington where slick politicians don’t speak when they can nod, and don’t nod when they can wink. Donovan may be backtracking under pressure from either Congress or the White House (and possibly both) after implying on national television Sunday morning that the Obama Administration hasn’t ruled out a new homebuyer tax credit. Specifically, Donovan said on CNN that it was too soon to determine whether a new tax credit was in the government pipeline.

"I think it's too early to say after one month of numbers whether the tax credit will be revived or not. All I can tell you is that we are watching very carefully,” Donovan said.

On Monday, White House Press Secretary Robert Gibbs told reporters that a new homebuyer’s tax credit “is not high on the list.”

The highly popular deal provided a $8,000 tax rebate to first-time homebuyers and a $6,500 tax credit to all other homebuyers. The rebate was largely credited with an uptick in U.S. home sales in late 2009 and early 2010 (it expired in April).

But it wasn’t just Donovan who went on the record on a new homebuyer’s tax credit. Florida Governor Charlie Crist said on the same CNN program where Donovan appeared that a new tax credit would “help enormously.” Crist may have been engaging in a some old-fashioned lobbying, given the precarious state of Florida’s housing. Realty Trac reports one of every 171 Florida homes is in foreclosure, making Florida the third highest state when it comes to foreclosure, right behind Nevada and Arizona.

While demand for financial help from the federal government might conceivably be high, given the fact that U.S. home sales fell to a 15-year low in July, few major housing industry groups are asking for more tax rebates.

"We are not advocating another one,” Walter Molony, a spokesman for the National Association of Realtors told Reuters last week. “We think it's important for the market to have time to recover on its own."

There’s no doubt some help from the federal government is needed to boost housing sales. But that help should come down the lines of refinancing aid for homeowners while putting stronger pressure on banks and mortgage lenders to open their coffers and get more borrowers the financing they need.

The new homebuyer tax credit, it would seem right now, is anything but a help.

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