Stimulus Package Has Construction Winners, Losers

Washington, DC, Feb. 10, 2009--Homebuilders like Centex Corp., the second-largest U.S. homebuilder by sales, would be among the biggest winners under the $838 billion stimulus measure the U.S. Senate is poised to pass today.

The Senate is more generous to automakers and homebuilders than the House was in the $819 billion measure it passed last month.

Centex,D.R. Horton Inc., and other U.S. homebuilders might see sales increase as consumers used a planned tax credit of $15,000, or 10 percent of the purchase price, whichever is less, under the Senate legislation.

“If someone’s going to give you $15,000 in free money it has to be stimulative,” said Eric Landry, an analyst at Morningstar in Chicago. “If nothing is done, we’re looking at another year of significantly lower starts.”

The new credit doesn’t have to be repaid, and all homebuyers are eligible. It would replace a $7,500 tax credit for first-time buyers, passed last year, that had to be repaid over 15 years.

“We’re pretty happy with the way the Senate bill is shaping up,” said Jerry Howard, president and chief executive officer of the National Association of Home Builders. “We think it will entice a lot of those people sitting on the sidelines into the marketplace.”

Howard said the group is “going to throw the kitchen sink” at the House to keep the provision in the final stimulus bill.

Companies anticipating a boost from public-school construction funded by the House bill would be disappointed if the Senate measure prevails. It eliminates almost all of the $20 billion the House allotted for that purpose.

The school-construction money was removed from the Senate bill because some lawmakers thought the funding should be taken up as part of the regular budget process, Senator Lisa Murkowski, an Alaska Republican, said in an interview yesterday. She said she will vote against the stimulus bill today.

“Construction jobs are the clearest short-term stimulus you can produce because it is an immediate job for people within the construction industry who right now are facing steep unemployment,” said Randi Weingarten, president of the American Federation of Teachers.