Housing weakness spurs calls for new home buyer tax credit

There was speculation in Washington this past week that the Federal government might get back into the business of stimulating the national housing market.

CNN’s Sunday news show “State of the Union” focused on calls by some politicians and housing analysts for a new Federal home buyer tax credit in response to July’s weak housing sales data, which showed a broad based slowdown in home sales across the US.

July was a very bad month for real estate in Massachusetts, mirroring the weakness seen nationally.

Successful Federal tax credits

The new tax credit would presumably be along the lines of the tax credits that were allowed to expire earlier this year.

There were two federal tax credits for home buyers in 2009 – 2010. Both terminated at the end of last April.

One tax credit was for first time buyers ($8,000.00). The other credit ($6,500.00) was designed to help certain homeowners seeking to buy a new residence.

August data may help clarify the need

August housing sales data will start being reported later this week.

If further weakness in US home sales is widespread, expect Federal policy makers to pay more serious attention to the idea of resuming some form of home buyer tax credit.