Nov. 2 Daily News editorial

The Commerce Department last week reported that new home sales fell 3.6 percent in September. It was the first decline in home sales since March. Many economists expressed surprise. They had expected sales to continue five-month rise.

Realtors, however, say they saw this coming. The tax credit for first-time home buyers that has fueled this mini-recovery in the housing market expires at the end of November. Since it takes anywhere from 45 to 60 days to close a home sale, many prospective buyers began pulling back in early September. What’s needed to get home sales moving upward again, the industry says, is an extension of the tax credit.

Senate leaders responded to the industry’s call with uncommon speed, agreeing last Wednesday to extend the credit. The proposal, negotiated by Sens. Chris Dodd, D-Conn., and Johnny Isakson, R-Ga., would extend the existing $8,000 tax credit for first-time homebuyers to the end of June and provide a $6,500 credit to all buyers who have owned their current homes for five years or more.

We support this extension, with some reservations, and expect it to be enacted into law well before the end of this month. The homebuyers’ tax credit has been a fairly effective stimulus for the housing industry. For that reason, it remains a popular initiative among both Democrats and Republicans. House leaders already have expressed support for an extension of the credit.

Our reservations have to do with costs. The existing tax credit, enacted around a year ago, is projected to cost about $10 billion. That’s a relatively small addition to the nation’s growing debt, we know. But that debt is looming large. It’s now larger than the total national debt for the first 200 years of the Republic, according to Associated Press economic writer Martin Curtsinger. The interest, alone, has become a heavy burden. The government shelled out $190 billion over the past 12 months on Treasury securities sold to finance the national debt. Clearly, the country is closing fast on that proverbial day of reckoning.

Nevertheless, the urgent need on this day is get the national economy moving. And this added investment in restarting one of the economy’s most important engines seems to make good sense. The housing industry clearly is in need of more stimulus. It does not appear ready to keep improving on its own. There is real concern that, absent an extension of the homebuyers’ tax credit, home sales will continue to slump for another year or more, further delaying recovery from this nation’s worst recession since the Great Depression. This is spending that we think — and certainly hope — will make a meaningful difference.