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WASHINGTON — Debate is growing on whether the government should extend the $8,000 tax credit for first-time homebuyers that has helped fuel this summer’s home sales and housing construction.

There have been more than a dozen bills introduced in Congress to prolong the life of the tax credit past the Nov. 30 deadline. This week, the White House fueled the discussion, saying its economic team is evaluating the credit’s impact on home sales and will make a recommendation to President Barack Obama.

Treasury Secretary Timothy Geithner said Thursday he hasn’t "made a judgment yet" on extending the credit. "Obviously that’s something that I’m going to take a careful look at."

The credit is helping stabilize the housing market, but there are conflicting views about the practicality and cost of an extension. The National Association of Realtors and the National Association of Home Builders have launched marketing campaigns touting the credit and have pushed Congress to keep it going. But some lawmakers are balking at the cost, which may hit an estimated $15 billion — more than double the amount projected in February’s economic stimulus bill.

The federal tax credit covers up to 10 percent of the home price, or up to $8,000, for first-time buyers. Combined with low mortgage rates and falling home prices, the credit helped end the worst housing recession in a generation.

Home sales have been rising since May. Prices have stabilized and are gradually increasing in many cities. The glut of unsold homes has been pared down.

The tax credit will draw about 400,000 buyers into the market this year, said Mark Zandi, chief economist for Moody’s Economy.com, who supports extending the tax credit into at least the middle of next year.

"It’s too early for policy makers to step away from the market," Zandi said. "The risks are too high."

But Dean Baker, co-director of the Center for Economic and Policy Research, argues the money behind the tax credit could be used for more pressing matters — like unemployment insurance, food stamps and aid to state and local governments.

"It’s really bad policy. You’re throwing a lot of money, in my mind, in the garbage," said Baker, who actually took advantage of the $8,000 credit this year.

EXTENSION LIKELY

The odds that Congress will approve an extension are around 60 percent, estimates Jaret Seiberg, an analyst at the Washington Research Group.

There is a widely shared concern on Capitol Hill that without the tax credit, home prices will begin falling again because job losses will continue to curb demand and reverse this year’s gains in the housing market.

Still, it appears that builders are viewing the situation with a cautious eye.

A Commerce Department report released Thursday showed single-family home construction dipped 3 percent in August to an annual rate of 479,000 units, the first setback following five straight monthly gains. And applications for building permits for single-family homes, a gauge of future activity, fell 0.2 percent in August.

Some economists held out hope that the drop would be temporary.

"A clear uptrend is emerging" in single-family homes, Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients.

New-home construction could rise further in the next few months as builders respond to greater demand from first-time buyers for smaller homes, he added.

Overall housing construction, which includes apartments, rose 1.5 percent to an annual rate of 598,000 units, the highest level since November, the Commerce Department said Thursday.

Regionally, construction rose 23.8 percent in the Northeast and 0.9 percent in the Midwest. Activity was flat in the West and fell 2.4 percent in the South.

Some economists said the overall housing construction gain was an encouraging sign that the worst is over for that troubled market.

"This sector is likely to start adding to growth rather than holding back the economy," said Joel Naroff, chief economist at Naroff Economic Advisors.

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