WASHINGTON – Top lawmakers threw their support Tuesday behind a proposal to use $24 billion in government funds to help struggling borrowers, as reports showed U.S. home prices sinking in four out of five cities and homebuilders reported their worst-ever business outlook.
With a clear and present threat to the U.S. economy, Democrats stepped up pressure on the Bush administration to direct taxpayer money to help more troubled borrowers. Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said “it is essential” to use some of the funds in the government’s $700 billion financial rescue program to stem the tide of foreclosures.
Likewise, House Speaker Nancy Pelosi, D-Calif., publicly urged Treasury Secretary Henry Paulson to support a proposal that would use some of the government’s bailout funds to help about 1.5 million households avoid foreclosure.
But Paulson isn’t budging.
“It is hard to imagine, no matter what program we have, that we’re not going to have a good number of foreclosures,” he said at a House hearing Tuesday.
Lawmakers have the power to impose new conditions on the use of the bailout money, but new legislation appears unlikely before President-elect Barack Obama takes office in mid-January.
Meanwhile, the latest reports brought more bad news for the hobbled housing market.
Homebuilders’ confidence in a near-term housing recovery sank to a new all-time low this month. The National Association of Home Builders, which started a market index in January 1985, said that barometer tumbled five points to nine in November, reflecting growing worries about the U.S. financial crisis, rising unemployment and weakening consumer confidence.
Index readings higher than 50 indicate positive sentiment about the market. But the index has drifted below 50 since May 2006 and below 20 since April.
Also Tuesday, the National Association of Realtors said that 120 out of 152 metropolitan areas it tracks saw the median home sale price decline in the July-September quarter compared with a year ago. Nationally, sales fell by almost 8 percent compared with last year.