NEW YORK (CNNMoney.com) – While momentum is building on Capitol Hill to extend the $8,000 first-time homebuyer credit, President Obama's housing secretary said Tuesday the administration has not decided whether to support its expansion.
Housing Secretary Shaun Donovan told the Senate Banking Committee that the administration wanted more time to better assess the cost of the credit, which expires on Nov. 30.
"Within a few weeks we'll have sufficient data to get to a conclusion on this," Donovan said. "It's a question of understanding more fully the costs to the taxpayer."
He said there is "clear evidence" the credit has had some positive benefits and that its expiration could have "some negative implications" for the housing market.
At the same time, Donovan said that the end of the credit would not be "catastrophic" because of other actions the government is taking to support the flagging housing market. Interest rates are being kept low and the Federal Housing Administration is playing a more prominent role in lending to homebuyers.
But lawmakers pushing to extend the credit are concerned the housing market is going "to die a sudden death" after Nov. 30, as Sen. Johnny Isakson, R-Ga., said Tuesday.
Isakson and other supporters believe that keeping the credit in place
could further boost home sales, stabilize housing prices and generate jobs.
Isakson and Senate Banking Chairman Christopher Dodd, D-Conn., have co-sponsored an amendment that would extend the credit until the end of June 2010 and be available to single filers making up to $150,000 and joint filers making up to $300,000. Currently the credit is limited to homebuyers who haven't owned a home for the past three years, who make half those amounts and who close on their purchases by Nov. 30.
Whether or not the credit is extended, forecasters are expecting further price declines in many markets due to rising foreclosure and unemployment rates in 2010. Supporters of extending the credit believe it could help mute those price declines.
Opponents say extending and expanding the credit would be a waste of money and only temporarily stave off further price declines.
When asked whether he thought the credit was spurring confidence or artificially inflating prices, Donovan told lawmakers he believes: "Given the decline we've been through, the likelihood that the credit is inflating the market beyond where it would be is very low."