The $8,000 tax credit for first-time home buyers passed by the US Congress last winter, was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it.

As many as 40% of all home buyers this year will qualify for the credit, on track to cost $15bn, more than twice the amount that was projected when Congress passed the stimulus bill in February.

The real estate industry and some economists say this is money is well spent. They contend the credit is doing what it was meant to do, encouraging a recovery in the housing market that is gathering steam. Analysts say the credit is directly responsible for several hundred thousand home sales.

Sceptics argue that most of the money is going to people who would have bought a home anyway. And they contend that unless it is allowed to expire on schedule in late November, the tax credit is likely to become one more expensive government program that refuses to die.

New York Times