A bill that would extend unemployment benefits as well as expand the homebuyer's tax credit program won't be voted on until Monday evening at the earliest.
The bill, which is technically an amendment to the Emergency Unemployment Compensation Extension Act, was introduced by about four dozen senators Thursday afternoon, following a battle over efforts to attach other amendments.
In an effort to expedite the process, Majority Leader Harry Reid (D-Nev.) filed a motion to end discussion of the amendment. A cloture vote is scheduled for 5 p.m. ET Monday. Even with an affirmative vote, Senate rules allow opponents to put off a vote on the bill itself for another 30 hours.
Both the housing credit and jobless compensation extensions are seen as critical to the economic recovery, which remains unconvincing in some quarters. After months of gains, momentum in the housing sector appears to be slowing, perhaps partly because potential buyers are uncertain they can close a deal by the Nov. 30 deadline to qualify for the $8,000 credit.
The bill extends the deadline to April 30, 2010, expands the credit to repeat buyers and raises existing income eligibility limits.
Under the new proposal, 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.
Income limits will be raised to $125,000 for individuals and $225,000 for couples, vs. $75,000 and $150,000 previously.
The maximum house value rises to $800,000.
Senators Chris Dodd (D-Conn.), who chairs the Banking, Housing and Urban Affairs Committee, and Johnny Isakson (R. Ga.), a former real estate professional, have been two of the loudest proponents of an extension and expansion.
The new terms represent a compromise between two factions in the Senate and essentially split the difference with a less generous one advanced by Reid, whose home state of Nevada leads the nation in foreclosures, and Sen. Max Baucus (D-Mont.), who heads the Senate's finance committee.
“Every economist will tell you we have to steady the housing market before the economy will turn around,” said Dodd in outlining the provisions Thursday. “We can’t afford to let this tax credit expire now. "
Some 2 million Americans also face the expiration of their unemployment benefits, if coverage is not extended. More than 15 mnillion are now out of work.
The bill would give workers an additional 14 weeks. Those living in states with unemployment rates over 8.5 percent (the national rate is 8.9 percent) would get 20 weeks. Congress passed a similar measure earlier this year.
Unemployment is expected to continue its rise during the early part of 2010, with some economists predicting a rate of 10 percent or more. (The October rate along with payroll data are due out next Friday.)
The weak labor market market has been a drag on housing for sometime; as people lose their jobs, some become delinquent in their mortgage payments and the property goes into foreclosure. That's created a glut of properties and put downward pressure on prices.
The decision to apply the tax credit program to repeat buyers and those with higher incomes is notable. Supporters say the original plan 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.
The Obama administration Thursday urged the Senate to extend the housing credit, but it is unclear if the White House now favors expanded eligibility.
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.
Isakson said it would be the "last extension."