If the U.S. government's $7,500 tax credit is intended to lure would-be first-time home buyers off the proverbial fence, Pulte Homes has a plan that will all but yank them off of it. Beginning tomorrow, Aug. 5, the company is rolling out a new sales campaign that will allow first-time buyers to double their tax benefit.

CEO Richard Dugas remained fairly tightlipped about the details of the promotion during an NAHB-sponsored conference call earlier this afternoon. However, he did reveal that the promotion, which will run through Sept. 15, includes a sales incentive that matches the government-sponsored tax benefit--only the Pulte version of the credit will apply to all buyers rather than just first-timers.

Dugas said that the campaign intends "to stimulate focus on the tax credit," which he called a "real shot in the arm" for housing. By kicking off a promotion in tandem with the passage of the housing rescue bill, Pulte could help raise consumer awareness of the tax provision. And the quicker consumers know about the government incentive, the faster buyers should return to the home buying market, he said, urging his home builder peers and the media to push the news to consumers.

However, there are several caveats tied to the provision that could decelerate buyers' anticipated return to the market. First, while deemed a credit, the tax provision actually functions like a 15-year, interest-free loan. People who purchase their first home in 2008 will begin repaying the loan in 2010 to the tune of $500 per year. Second, unlike seller-funded down payment assistance (DPA) programs, which were eliminated from the housing legislation, there's an inherent lag in gains from the tax credit. Rather than realizing a benefit at the time of closing, first-time buyers lured into homeownership this year by the tax provision won't benefit until 2009, after they've filed their tax returns.

Dugas acknowledged that the loss of seller-funded down payment assistance programs was a setback. "Clearly, it's not a positive net for the overall program," he said. However, he said that even with the lag in benefit realization, he thought the tax credit would offset any damage incurred by the elimination of the DPA programs.

Dugas said his reasoning was two-fold: one, $7,500 was a sizeable amount for a credit; two, tax credits of this type have been successful before. He pointed to the mid-1970s when the Ford administration authorized a $2,000 tax credit for new-home buyers. The fact that this tax credit is larger and farther reaching--the current credit applies to first-time buyers of new, existing, and foreclosed homes--gave Dugas faith that the provision would be triumphant in "breaking the log jam of unsold homes."

Roughly half of Pulte's closings are to active adult buyers, mostly through its Del Webb brand. The biggest challenge to those buyers in this market is their inability to sell their current home, Dugas said. By enticing first-time buyers, which account for about 20% of Pulte's closings, back into the market, inventory at the lower price levels will clear, making room for move-up buyers to eat up inventory at higher price points.

Following this logic, Pulte's soon-to-be-officially released promotion aims to further incite improvement all the way up the home-buyer food chain. Dugas said a detailed press release on the promotion will be distributed tomorrow.