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By STEPHEN OHLEMACHER (AP)

WASHINGTON — Buying a home is about to get cheaper for a whole new crop of homebuyers — $6,500 cheaper.

First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the House voted 403-12 Thursday to extend and expand the tax credit to include many buyers who already own homes. The Senate approved the measure Wednesday, and the White House said President Barack Obama would sign it Friday.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn’t owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

“This is probably the last extension,” said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that was included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.

“We are still in a world of economic hurt, and Congress must continue to act boldly and creatively,” said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. “With the right mix of tax breaks and investments we will get through this recession and get folks working again.”

The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.

“For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home,” Bond said. “And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place.”

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.

The business tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years, giving them refunds of taxes paid in those years. Under current law, businesses with annual gross receipts of more than $15 million can claim losses back only two years.

The tax break would help industries suffering losses in 2008 or 2009, including retailers, homebuilders and newspapers. Congress included a scaled-back version of the tax break — for companies with revenues of $15 million or less — in the economic recovery package enacted in February. The new tax break would be available to companies of any size, providing a quick source of cash.

The U.S Chamber of Commerce has been a big backer of the tax break for money-losing companies.

“It frees up capital that they can use to maintain jobs and potentially even hire new people as the economy returns,” said Caroline Harris, senior tax counsel for the U.S. Chamber of Commerce.

The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.

The bill is H.R. 3548.

Copyright © 2009 The Associated Press. All rights reserved

By STEPHEN OHLEMACHER (AP) –
WASHINGTON — Buying a home is about to get cheaper for a whole new crop of homebuyers — $6,500 cheaper.
First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the Senate voted Wednesday to extend and expand the tax credit to include many buyers who already own homes. The House could vote on the bill as early as Thursday.
Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn’t owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.
“This is probably the last extension,” said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.
The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that the Senate included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.
“We are still in a world of economic hurt, and Congress must continue to act boldly and creatively,” said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. “With the right mix of tax breaks and investments we will get through this recession and get folks working again.”
The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.
Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.
“For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home,” Bond said. “And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place.”
The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.
The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.
Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.
The business tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years, giving them refunds of taxes paid in those years. Under current law, businesses with annual gross receipts of more than $15 million can claim losses back only two years.
The tax break would help industries suffering losses in 2008 or 2009, including retailers, homebuilders and newspapers. Congress included a scaled-back version of the tax break — for companies with revenues of $15 million or less — in the economic recovery package enacted in February. The new tax break would be available to companies of any size, providing a quick source of cash.
The U.S Chamber of Commerce has been a big backer of the tax break for money-losing companies.
“It frees up capital that they can use to maintain jobs and potentially even hire new people as the economy returns,” said Caroline Harris, senior tax counsel for the U.S. Chamber of Commerce.
The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.
The bill is H.R. 3548.

Copyright © 2009 The Associated Press. All rights reserved.

Oct. 29 (Bloomberg) — The U.S. economy grew in the third quarter for the first time in more than year, propelled by stimulus-driven gains in consumer spending and home building.

The world’s largest economy expanded at a 3.5 percent pace from July through September, exceeding the median estimate of economists surveyed by Bloomberg News, after shrinking the previous four quarters, figures from the Commerce Department showed today in Washington. Household purchases climbed 3.4 percent, the most in more than two years.

Policy makers will now focus on whether the recovery, supported by federal assistance to the housing and auto industries, can be sustained into 2010 and generate jobs. The record $1.4 trillion budget deficit limits President Barack Obama’s options for more aid, while Federal Reserve officials try to convince investors that the central bank will exit emergency programs in time to prevent a pickup in inflation.

“A lot of this is thanks to government support,” Kathleen Stephansen, chief economist at Aladdin Capital Holdings LLC in Stamford, Connecticut, said in an interview on Bloomberg Television. “We still have major headwinds for the consumer. That worries me. The consumer, in fact private demand in general, is not ready yet to pick up the growth baton from the government.”

Stock-index futures jumped after the better-than- anticipated reading on growth. The contract on the Standard & Poor’s 500 Index was up 1 percent to 1,048.8 at 9:03 a.m. in New York. Treasury securities fell.

Jobless Claims

A report from the Labor Department showed 530,000 workers filed claims for jobless benefits last week, more than anticipated and signaling the job market is slow to heal even as growth picks up.

The economy was forecast to grow at a 3.2 percent annual pace, according to the median estimate of 79 economists surveyed by Bloomberg News. Estimates ranged from gains of 2 percent to 4.8 percent.

The economy shrank 3.8 percent in the 12 months to June, the worst performance in seven decades. The four consecutive decreases through the second quarter marks the longest stretch of declines since quarterly records began in 1947.

The gain in consumer spending, which accounts for about 70 percent of the economy, “largely reflected” an increase in purchases of automobiles attributable to the administration’s “cash-for-clunkers” plan, the report said. The 22 percent jump in purchases of durable goods, which includes autos, was the biggest since 2001. Total purchases were forecast to climb 3.1 percent, according to the survey median.

Excluding Autos

Excluding the influence of auto sales, production and inventories, the economy grew 1.9 percent last quarter.

While most economists estimate the recession has ended, an official pronouncement will take many months to materialize. The National Bureau of Economic Research, based in Cambridge, Massachusetts, is responsible for determining when contractions begin and end. Robert Hall, head of the committee charged with making the call, said in August it may take more than a year for the group to reach a conclusion.

Residential construction jumped at a 23 percent annual rate last quarter, the first gain in almost four years and the biggest since 1986. The rebound added 0.5 percentage point to growth.

Homebuilding rebounded as sales climbed, propelled in part by an $8,000 tax credit for first-time buyers and Fed purchases of mortgage-backed securities that helped lower borrowing costs.

To Continue Reading: (Bloomberg) Reporter on this story: Timothy R. Homan

WASHINGTON (Reuters) – Sales of newly built U.S. single-family homes unexpectedly tumbled 3.6 percent in September in their first drop since March, but the inventory of new homes available at the end of the month shrank to the smallest in 27 years, government data showed on Wednesday.

September single-family home sales totaled 402,000 units at an annual pace. Analysts polled by Reuters had expected new home sales to rise to a 440,000 unit annual pace from a revised 417,000 units in August, which was originally reported as 429,000 units.

The median sales price rose in September to $204,800 from $199,900, while the average sales price rose to $282,600 from $256,500.

(Reporting by Lisa Lambert, Editing by Chizu Nomiyama) Click Here for Full Article

By Phil Izzo

The S&P/Case-Shiller 20-city home-price index, a closely watched gauge of U.S. home prices, rose 1.2% in August from July in the fourth straight monthly increase, but prices remain below year-earlier levels.

For the 17th straight month, no area in the 20-city index posted a year-over-year price gain. That put nationwide prices at levels seen in 2003.

The index isn’t seasonally adjusted, and home prices are benefiting from the traditional increase seen in the spring and summer months. But even taking the usual bump into account, the numbers indicate some stability in the market. “The activity in this spring is far greater than what we’ve seen in recent years,” said Dan Greenhaus of Miller Tabak & Co.

Some economists aren’t convinced the gains are sustainable. “While many are interpreting the most recent results from this index as indicative of a bottom in home prices, we do not believe this to be the case,” said Joshua Shapiro of MFR, Inc. “Rather, this is probably a correction after unsustainable 2%-3% per month declines recorded over the autumn and winter months when the overall economy was in free-fall. Demand stimulated by the $8000 first-time homebuyer tax credit has also likely played an important role.”

Seventeen of the 20 areas — all but Cleveland, Charlotte and Las Vegas — saw monthly price gains in August. Minneapolis posted the strongest monthly increase at 3.2%, but prices there remain more than 13% below August 2008 levels.

Las Vegas fared the worst, not only posting a monthly decline but the largest year-to-year decline amid the 20 cities. Phoenix managed post another a monthly increase but was still seeing annual declines in excess of 25%.

• See  the full S&P/Case-Shiller report.
• Read the full story.

Below, see data from the 20 metro areas Case-Shiller tracks, sortable by name, level, monthly change and year-over-year change — just click the column headers to re-sort.

(About the numbers: The Case Shiller indices have a base value of 100 in January 2000. So a current index value of 150 translates to a 50% appreciation rate since January 2000 for a typical home located within the metro market.)

Home Prices, by Metro Area

Metro Area	May 2009	Change from April	Year-over-year change
Atlanta	111.19	1.0%	-10.6%
Boston	155.95	0.9%	-4.2%
Charlotte	120.72	-0.4%	-8.6%
Chicago	130.55	1.7%	-12.7%
Cleveland	107.42	-0.5%	-2.8%
Dallas	121.44	0.2%	-1.2%
Denver	130.07	1.0%	-1.9%
Detroit	71.59	1.9%	-22.6%
Las Vegas	105.78	-0.3%	-29.9%
Los Angeles	166.52	1.6%	-12.0%
Miami	148.91	1.1%	-18.8%
Minneapolis	122.66	3.2%	-13.7%
New York	174.89	0.5%	-9.6%
Phoenix	108.41	1.6%	-25.1%
Portland	150.46	0.3%	-12.5%
San Diego	153.34	1.6%	-8.9%
San Francisco	132.47	2.8%	-12.5%
Seattle	149.54	0.1%	-14.7%
Tampa	143.43	0.4%	-17.7%
Washington	178.84	1.4%	-7.9%

Source: Standard & Poor’s and FiservData

By Vivien Lou Chen

Oct. 26 (Bloomberg) — The U.S. housing market faces a “difficult” return to normal because government-sponsored enterprises own or guarantee most mortgage lending while alternative sources have disappeared, said an economist with the Federal Reserve Bank of San Francisco.

“Fannie Mae, Freddie Mac, and Ginnie Mae now own or guarantee an overwhelming share of originations,” bank senior economist John Krainer wrote in a paper released today. “At the same time, non-agency mortgage securitization and loans retained in lender portfolios have largely dried up.”

The paper underscores the challenge that economists at the San Francisco Fed, one of 12 regional Fed banks, believe that the economy faces as it begins to emerge from the worst recession in seven decades. Bank researcher Glenn Rudebusch concluded in another paper this month that the economy is not likely to return to full employment soon even though the recession is “almost certainly” over.

To Continue Reading: (Bloomberg)