Reuters News: President Barack Obama administration noncommittal on housing tax credit,  Obama’s top housing adviser expressed doubts on Tuesday that the United States could afford to extend a popular tax credit for first-time homebuyers beyond its expiration next month.

Housing and Urban Development Secretary Shaun Donovan said he was aware the program was popular with lawmakers, but said: “at the same time, I am mindful that these proposals can be very expensive, especially at a time of significant budget deficits.”

In testimony prepared for delivery to the Senate Banking Committee, Donovan pledged to “work with Congress to fashion appropriate and effective homebuyer incentives, mindful of both their benefits to stimulating new demand and their costs to the American taxpayer.”

Georgia Republican Senator Johnny Isakson and Banking Chair Chris Dodd, a Connecticut Democrat, want Congress to extend the $8,000 tax credit through next June.

Isakson told the panel that failure to extend the popular tax credit would lead to “a dramatic and awful situation in the United States of America.”

Isakson’s housing credit amendment would be attached to legislation pending in the Senate that would extend unemployment benefits. The Senate could vote on that as early as this week.

Donovan also told the panel that the Federal Housing Administration would not need to ask Congress for additional funds to increase its capital levels.

Reuters report.