This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

We Need Another Homebuyer Tax Credit, Poll Says

NEW YORK ( TheStreet) -- The U.S. needs another round of homebuyer tax credits to help stimulate the housing market and the economy, according to readers of TheStreet.

It's no secret the U.S. housing market has been under tremendous pressure for some time, and demand fell further after the springtime expiration of federal tax credits for homebuyers. Most analysts agree the situation is likely to get worse before it gets better.

We asked our readers if another round of homebuyer tax credits would help or hurt the economy. TheStreet overwhelmingly agreed that yes, another homebuyer tax credit would benefit the housing market and the entire economy. Out of 207 votes, 62.3% respondents voted yes while 37.7% vote no, viewing another tax credit as simply barking up the wrong tree.

The housing market saw sales ramp up in March and April as consumers rushed to take advantage of tax credits that offered as much as $8,000 for first-time homebuyers and $6,500 for repeat buyers. Following the expiration of those credits on April 30, the market saw a dramatic decline in demand for the month of May that spilled over into June. Data for July is expected to show a further drop in demand. Lawmakers later extended the deadline to close on a home purchase and still qualify for the tax credit to Sept. 30.

>>4 Top Homebuilder Stocks: Life After the Tax Credit

The rush of homebuyers looking to take advantage of federal tax credits helped homebuilders like D.R. Horton (DHI - Get Report) and M.D.C. Holdings (MDC - Get Report) grow new home sales by strong double-digit percentages last quarter, primarily because the two homebuilders were willing to go out and build spec homes, explained Stifel Nicolaus analyst Michael R. Widner. In other words, they were willing to take the risk of building new home inventory without contracted buyers in place. The bet paid off when hoards of homebuyers showed up in April wanting to take advantage of the credits, and were willing to make a rushed deal to qualify for the incentives.

Beazer Homes (BZH - Get Report) recently reported a sharp drop in orders and backlog in the second quarter, and a cancellation rate that spiked 600 basis points to 29%.

>>Beazer Homes: Hard Times Ahead

"The weak order trends signal trouble for the fourth quarter," noted Vicki Bryan, senior high yield analyst at Gimme Credit. "Beazer will have to convert an unprecedented -- and unlikely -- 143% of its backlog just to deliver the same number of homes sold in [the fourth quarter of 2009] (when sales were boosted by the November expiration of stimulus programs)."
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BZH $19.18 1.54%
DHI $29.69 0.75%
KBH $15.98 0.13%
MDC $29.86 0.98%
LEN $53.04 1.65%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs