As the nation prepared to celebrate the 234th anniversary of the signing of the Declaration of Independence, President Barack Obama on Friday signed an extension of the closing date for the federal home buyer tax credit. A few days before, the Senate had passed the measure on a unanimous voice vote, following a quick approval by the House of Representatives.
Buyers who contracted to purchase their homes on or before April 30 now have until September 30 to close those transactions. Before Obama signed the extension—HR 5623, otherwise known as “The Homebuyer Assistance and Improvement Act of 2010”—the closing deadline was June 30. The National Association of Realtors, which lobbied for the extension, estimated that as many as 180,000 buyers would not have made that deadline, partly because the sheer number of buyers who bought houses to take advantage of the tax credit had overwhelmed the ability of mortgage lenders to process those purchases on time.
First-time buyers are eligible for a tax credit up to $8,000, and buyers of existing homes for a credit up to $6,500. The Treasury Department estimates that nearly 3 million taxpayers claimed the tax credit through May 22, at a cost to the nation’s coffers in excess of $21 billion.
The discontinuation of the federal tax credit program after April 30 had an immediate and chilling effect on home sales. The Commerce Department reported that new-home sale sales in May were off 18.3% from the same month a year ago. NAR’s index of pending home sales—contracts on previously owned homes—fell by nearly 16% in May compared to May 2009.
John Caulfield is senior editor for BUILDER magazine.
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