Biden to announce new home buyer incentives at SOTU: Report

While mortgage rates fluctuate, but ultimately remain at elevated levels, President Biden is expected to announce new incentives for homebuyers in his State of the Union address Thursday night, according to the Washington Post.

Yahoo Finance Housing Reporter Dani Romero explains what these incentives and tax credits will mean for middle-class and first-time homebuyers.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

JOSH LIPTON: Mortgage rates pulling back last week as they continue to be one of the biggest hurdles for homebuyers looking to enter the market. But according to a report from the Washington Post, President Biden could be announcing some new incentives at his State of the Union speech tonight. Yahoo Finance's Dani Romero joins us now with more. Dani.

DANI ROMERO: Josh, President Biden is on a mission to tackle the housing crunch. And today, he will announce these new set of housing initiatives at the State of the Union address. So here's what's on the table. One of the proposals includes a $5,000 tax credit per year for two years for middle and first time home buyers.

And essentially, that would have the same effect as lowering those mortgage rates by more than 0.5 percentage points. That looks really attractive, especially that mortgage rates are still really elevated. They're ranging in that high 6% range. But don't worry, sellers aren't out of luck either. There's another proposal. It's a one year tax credit of up to $10,000 for families who sell a starter home.

So the idea behind this is really to unlock some of that inventory into the market. Some housing experts though, they are waving some red flags saying that with these new tax credits, it really could strengthen the demand in the housing market while supply is really trying to catch up. And so that could push home prices up. But again, at the end of the day, congress will have to approve all of these proposals on the table.

- And we'll see if they do.

DANI ROMERO: Yeah.

- All right. Thanks a lot Dani, appreciate