How big an effect has the $8,000 tax credit for first-time homebuyers had on the local real estate market?

Consider these numbers:

• Third-quarter sales of existing homes and homes overall were at their highest levels since 2005.

• Sales of new homes, though still at multi-year lows, were up more than 25 percent in the third quarter compared with the same quarter a year ago.

• September pending sales - home sales under contract but not yet finalized - were at their highest level ever for the month.

• In the $160,000-and- under category, which local Realtors consider to be the "starter home" market, sales are up 25 percent for the year.

"I think we've certainly seen the effect of (the tax credit), especially in the lower price ranges," said Doug Rotthaus, executive vice president of the Realtors Association of Lincoln.

In a blog post last month at www.woodsbros.com, Gene Brake, CEO of HomeServices of Nebraska and Woods Bros Realty, said approximately one-third of recent home sales were to first-time buyers.

"... clearly the program has been wildly successful," Brake said in his post.

According to the Internal Revenue Service, more than 1.5 million homebuyers have benefited from the tax credit. The National Association of Realtors estimates that 355,000 of those buyers -- or nearly a quarter -- would not have bought without the credit.

The Realtors Association on Friday cited the tax credit for spurring sales of existing homes nationally, which were up 9.4 percent in September.

But the wildly successful program will come to an end soon if the government doesn't extend it.

The tax credit is scheduled to expire at the end of November, and buyers must close on their purchase by Nov. 30 to get the credit.

Since it typically takes a minimum of 30 days to close, time is running out.

Any hangup with loan approval or appraisals could extend that time, meaning for some buyers the window may have already closed.

But there is hope for those wanting to see the credit continue.

A proposal by Sens. Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., would not only extend the credit for another year but also open it up to all buyers and double the income limit -- currently $75,000 for individuals and $150,000 for married couples -- for those who qualify.

Kent Thompson, owner of Coldwell Banker Thompson Commercial Realty Group and president of the local Realtors Association, said the housing market has shown improvement, but it's still too fragile to go forward without some sort of stimulus plan.

"We need every tool we can get," he said.

Nowhere is that more evident than in Lincoln's new-home market.

For the first time in a long time, sales of new homes actually increased in the third quarter over the same period last year.

Mike Benker, owner of Excite! Builders and president of the Home Builders Association of Lincoln, said the tax credit played a role in the improvement.

"I think it's probably one of the better things the stimulus had in it," he said.

Benker said the tax credit has helped the homebuilding industry in two ways.

One, it's been a direct incentive for first-time homebuyers to buy lower-end new homes. But second, and maybe more importantly, people who have been able to sell their homes to first-time buyers are now looking to move up and, in some cases, build their dream home, he said.

But Benker said that while the local homebuilding market has stabilized and may be heading in the right direction, he's not ready to pronounce it healthy enough to prosper without some help.

"I'm not sure what will happen if they get rid of (the tax credit) right now," he said.

National Association of Realtors First Vice President Ron Phipps gave a dire warning Tuesday in testimony to the Senate Banking, Housing and Urban Affairs Committee.

"Without congressional action now, the market and our national economy may freeze again - possibly as soon as this month," Phipps said, according to a news release from the national association.

To critics of the tax credit, that's a chance worth taking.

Brookings Institution economist Ted Gayer wrote in a recent report the tax credit is "very poorly targeted" and is providing a subsidy to people who would have bought anyway.

Gayer went even further in his report, partially blaming other government programs encouraging people to buy homes for the real estate bubble that collapsed.

"Ultimately, we need to decrease the government's housing incentives, including the mortgage finance subsidies, the mortgage interest deduction and the favorable capital gains treatment for housing," he wrote. "A good place to start cutting the cord would be by not extending, let alone expanding, the homebuyer tax credit."

The tax credit has also been the subject of thousands of cases of potential fraud.

J. Russell George, Treasury Inspector General for Tax Administration, has identified around 100,000 instances in which the eligibility of the buyer for the tax credit is in question, including 580 claims in which the applicant is under the age of 18.

Local real estate officials, though, say the tax credit's benefits far outweigh its warts, and they point out that it's not just about giving a boost to Realtors and homebuilders, but helping the economy grow again.

"I think the (housing) stimulus is important for the overall economy," Rotthaus said. "The economy does well when housing does well."

Reach Matt Olberding at 473-2647 or molberding@journalstar.com.