Homebuilder Tax Credit Fails to Lift Sector

WASHINGTON (TheStreet) -- Shares of homebuilders are lackluster Friday morning, despite congress finally approving the extension of the homebuyers tax credit.

Even more significantly, the tax credit is also being offered to existing home owners. The bill, which is expected to be signed by President Barack Obama today, extends the $8,000 tax credit for first-time homebuyers to April 30 and will also allow people who have lived in a home for at least five years to receive $6,500 if they purchase a new home.

Regardless, shares of homebuilders are only up modestly. KB Home (KBH Quote) is flat, Lennar(LEN Quote) is growing 3.6% to $14, MDC(MDC Quote) is rising 1.1% $32.88, D.R. Horton (DHI Quote) is advancing 0.3% to $11.87, Toll Brothers (TOL Quote) is up 0.2% to $18.02 and Pulte Homes(PHM Quote) is growing 0.2% to $9.68.

Investors clearly remain skeptical that the tax credit will do much for a sustained recovery in the housing sector.

"In our opinion, extending the credit to existing homeowners would not likely reduce the huge supply of housing inventory," CreditSights said in a note.

-- Reported by Jeanine Poggi in New York

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