Economist: Extend homebuyers credit

WASHINGTON, Oct. 8 (UPI) -- Allowing the $8,000 credit for first-time U.S. homebuyers to expire Dec. 1 could lead to a sharp drop in house prices, a Democratic economic adviser says.

Mark Zandi, chief economist at Moody's Economy.com, told The New York Times sales of houses not affected by foreclosure would fall at a time when sales of foreclosed properties are expected to rise. Zandi, who advised Sen. John McCain, R-Ariz., during last year's presidential campaign, is now helping Democratic congressional leaders.

"The economic recovery will not evolve into a self-sustaining economic expansion and risks unraveling back into recession until house prices stop falling," Zandi said

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., met Wednesday with President Obama. White House aides told the Times the housing credit was only briefly discussed during a meeting that focused on ways of creating more jobs.

Reid, in a statement after the meeting, said the government must "continue efforts to strengthen the housing market by extending the homebuyer tax credit." He is up for re-election in a state hit hard by the housing slump.