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Home builders to seek a bigger tax credit for buyers

September 30, 2008|From Bloomberg News

Home builders, buffeted by at least $19 billion in losses since 2006, plan to ask Congress to help stop the bleeding.

The industry will ask lawmakers to pass a $15,000 tax credit for all home buyers, replacing a smaller incentive enacted this year that they contend failed to stimulate demand.

"Our members are really hurting," said Jerry Howard, chief executive of the National Assn. of Home Builders. "The tax credit passed in July seems to have failed to have sparked interest. We are hearing from high-volume and small-volume builders that it has had no impact."

The top 14 home builders have seen their market value plunge 69% to $27 billion since July 2005, the all-time high for a Standard & Poor's measure of largest home construction companies.

The builders association estimates that new single-family home sales will fall 33% this year from 2007 and climb 5% in 2009 from 2008.

Sales of new homes in the U.S. fell 11.5% in August to an annual rate of 460,000, a 17-year low, the Commerce Department said.

The median price slid 6.2% from a year earlier to $221,900, the lowest level since September 2004.

At least a dozen home builders have sought bankruptcy protection as conditions deteriorated, including WCI Communities Inc., Tousa Inc., Kimball Hill Inc., Levitt & Sons and Neumann Homes Inc. The plunging value of mortgage securities has fed the credit crisis and led to the failure of Lehman Bros. Holdings Inc., the fourth-biggest U.S. securities firm, and a government bailout of American International Group Inc., the largest U.S. insurer.

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