Home Sales May Get a Push

First-time homebuyers soon could get even more incentive to buy a house this year, officials for the U.S. Department of Housing and Urban Development said Tuesday.
HUD Secretary Shaun Donovan said the department is days away from finalizing a plan that would allow first-time homebuyers to use the federal government's $8,000 tax credit on a down payment and closing costs instead of waiting until they file their tax returns to get it.
Under the proposed plan, HUD-approved lenders, nonprofit groups and government entities would issue bridge loans to borrowers before their closings. The loans would be paid back from the borrower's tax credit.
Real estate and homebuilding groups have been pushing for the change and say it will spur home sales and lead to a quicker recovery of the troubled housing market.
"This will help homebuyers who are a little short on down payment but want to get into the market," said Paul Bishop, an economist with the National Association of Realtors.
"That's a pretty substantial segment of the market, and they'll be able to obtain a more affordable loan since they'll now have a larger down payment," Bishop said.
About 50 percent of the nation's homebuyers are first-timers and would qualify for the tax credit, according to the real estate group.
The new tax credit will stimulate an estimated 160,000 home sales across the nation - 101,000 of which would be first-time buyers who will receive the credit, he said.
An additional 59,000 homeowners would be able to buy another home if a first-time buyer purchases their home.
States such as Florida, which have been hard-hit by foreclosures and dropping home prices, really could benefit from the change, said Cynthia Shelton, president of the Florida Association of Realtors.
Enticing people to act now would help work off the backlog of homes, Shelton said.