Is the $8,000 First Time Home Buyer Tax Credit Enough to Save the Housing Market?

(MoneyWatch)  June's new construction and existing home sales numbers are out, and I think they're a mixed bag:

• New home sales increased 11 percent in June over May, according to the U.S. Commerce Dept. That's the highest amount in 9 years, and welcome bit of news for market-beaten developers.
• The total number of new homes sold dropped 21.3 percent from a year earlier, to about 384,000 on an annualized basis - not so good news.
• New construction building permits rose only 8.7 percent from May, and were down 52 percent from a year ago.
• The median sales price of new houses sold in June was $206,200, down about 12 percent from a year ago.
• The inventory of new homes (homes that are currently for sale) fell to an 8.8 months supply, from about a 10.2 month supply. Six months inventory is considered by many housing industry observers to be an optimal supply in a normal housing market.
• Last week, the National Association of Realtors announced that existing home sales were up 3.6 percent from the prior month.

Could it be that the $8,000 first-time home buyer tax credit is working?

While economists are busy falling all over each other to call an end to the housing crisis, it seems clear we are seeing a little boost from President Obama's $8,000 first-time home buyer tax credit. We're also seeing states like California and Georgia offer state tax credits that are generous enough to include all home buyers, or that lay on added incentives for buying new construction. And don't discount the city, county, and state housing authorities that have special down payment cash available for first-time buyers who qualify (typically these have income and location restrictions tied to them - to find a program, simply type in your city, county or state, then "housing authority down payment assistance" and the local programs should pop up).

That's a lot of home buying incentive cash. On the other hand, it's almost August. And, lenders are taking at least 60 days to close (if you have perfect credit and nothing goes wrong), which means if you qualify for the $8,000 first-time home buyer tax credit and you haven't started searching for a home, your window of opportunity is shrinking fast.

Right now, the $8,000 first-time home buyer tax credit will end on November 30, 2009. That gives you approximately two months to look for a home (August and September) and two months to close (October and November).

If you haven't closed on your existing or new home by the end of the day on November 30th, you'll lose out on your opportunity to grab your share of the Recovery Act pie.

And that's what home builders, real estate agents, mortgage lenders and everyone else who is trying to stay afloat this year are worried about. If all this cash being thrown at the housing market is only helping the market find a bottom (maybe), what's going to happen when the program is over?

If you're a fan of Sen. Johnny Isakson, you're gearing up for a fight to pass a $15,000 tax credit for all home buyers. The Mortgage Bankers Association has already come out in support for Sen. Isakson's legislation. The Realtors (the most powerful lobbying force in Washington, D.C.), haven't spoken yet, but what's not to like?

The real question is how do we build a sustainable housing market without having U.S. taxpayers footing the bill?

Read More:

• Better Hurry to Take Advantage of the First-Time Home Buyer Tax Credit
• How About a $15,000 Tax Credit for All Buyers - Even Millionaires?
• More Support For the $15,000 Tax Credit
• Uncle Sam Says Go Buy a House With Your $8,000 Tax Credit
• $15,000 Home Buyer Tax Credit Gets Another Boost