The Senate has agreed on a compromise measure that would extend and expand the popular home buyer's tax credit, "but it is not clear when or how it will be considered," according to a key Capitol Hill source.
That's because its fate is connected to a battle over amendments to a more important bill providing additional unemployment benefits.
"We do expect it to be considered at some point on the debate on unemployment insurance extension," said the source, who would not rule out action today.
The current home buyer tax credit, which is part of the massive stimulus bill signed into law in February, is set to expire Dec. 1, and there have been recent signs that housing activity is slowing, perhaps partly because potential buyers are uncertain they can close a deal in time to qualify for the $8,000 credit.
The home buyer credit is one of several amendments likely to be attached to a bill that would extend jobless benefits for all workers by 14 weeks with additional coverage for those living in states with unemployment rates over 8.5 percent. (Congress passed a similar measure earlier this year.)
The compromise homebuyer measure extends the tax credit to non first-time buyers and also raises current income ceilings. People who have lived in a primary residence for five consecutive years would be eligible for a $6,500 credit when purchasing a new property.
Such repeat buyers were barred from the original plan, prompting some to say that the credit was only helping lower-income buyers and thus creating a limited housing recovery. A Nixon-era program, for instance, applied to all buyers and owner-occupied residential properties and is thought to have helped new construction along with the existing home market.
Sens. Chris Dodd (D-Conn.), who chairs the Banking, Housing and Urban Affairs Committee, and Johnny Isakson (R. Ga.), who worked in the real estate industry for three decades, have been pushing for an expansion of the program for months.
The compromise version is said to represent the middle ground between the Dodd-Isakson proposal and a narrower one (limiting eligibility to first-time buyers) by Majority Leader Harry Reid of Nevada, which leads the nation in foreclosures, and Sen., Max Baucus (D-Mont.), who heads the senate Finance committee.
The tax credit has been a major factor in a home sales bump that started in the spring. A national realtors group has forecast the credit would lead to about a 350,000 sales that would not have ordinarily taken place. About 2 million people were expected to take advantage of the program.
Mortgage rates remain near historic lows and housing affordability is the best in years, as sellers drop prices to attract buyers.