Homebuyer Tax Credit Boosted Home Prices

A new report from FNC says that without the first-time homebuyer tax credit programs that expired earlier this year, home prices nationwide would be significantly lower than they currently are.

According to the company's Residential Price Index, national home prices showed an "abnormal" increase of 10.1 percent during the time the credit was active, and helped steady the national real estate market and pull it out of its decline.

"The result of this tax credit stimulus was modest home price stabilization which lasted through June 2010," said Robert Dorsey, chief data & analytics officer for FNC. "In other words, if Congress had not approved the first-time homebuyers tax credit, home prices would be 10 percent lower than they are now and falling rather than stable and slowly rising."

The effectiveness of the tax credit has been sharply debated in recent weeks. Because homes sales have dropped sharply since its expiration, many have questioned whether the program's $23.5-billion price tag was worth the cost. In July - the first month after the credit expired - the National Association of Realtors reported that home sales had dropped more than 27 percent from the previous month.