Sector Snap: Homebuilders Fall On Tax Credit Worry

NEW YORK (AP) — Shares of homebuilders dropped Wednesday as an analyst wrote that investors hoping for an extension of the $8,000 federal tax credit that has helped propel home sales in a fragile housing recovery may be disappointed.

The $8,000 tax credit for first-time home buyers is set to expire Nov. 30. There have been more than a dozen bills introduced in Congress to extend the credit, and Senate Majority Leader Harry Reid endorsed the idea of an extension last month.

The Obama administration has said it is considering extending the credit. Many analysts say it has helped the battered housing market start to turn around.

At a hearing on Capitol Hill Wednesday, homebuilders and real estate agents urged lawmakers to extend the program, with real estate agents saying it has led to nearly 400,000 home sales this year and helped the market absorb a massive wave of foreclosed homes.

Extending it will keep the market from sinking further, they said.

Home prices rose in July from June for the second straight month, according to the Standard & Poor's/Case-Shiller home price index. That's still down 30 percent from the peak in mid-2006, emphasizing the fragile nature of the recovery.