WASHINGTON (Bloomberg) — The Obama administration endorsed plans to extend an $8,000 tax credit for first-time homebuyers, saying it is helping stabilise the nation's housing market.

The tax break, enacted earlier this year as part of the $787 billion economic stimulus package, has "brought new families into the housing market and contributed to three consecutive months of rising home prices", Treasury Secretary Timothy Geithner said yesterday in a statement. The tax break will expire on November 30 unless Congress intervenes.

Senate Democrats have announced plans to extend the credit until April 30, while expanding it to include higher-income Americans and some who already own homes.

Senate Finance Committee Chairman Max Baucus said yesterday the new plan would offer a $6,500 credit for homebuyers who have lived in their prior residence for at least five years. Couples earning up to $225,000 and individuals up to $125,000 would qualify for the break, Baucus said. That's up from the current $75,000 limit for individuals and $150,000 for couples.

"The success of the American economy is closely tied to the success of the housing market; by helping to stabilise the housing market, the homebuyer tax credit has helped to shore up the economy as it begins to recover," said Baucus, a Montana Democrat. "This would enable an even greater number of potential homebuyers to take the credit."

Millions of renters earn more than $75,000, he said.

Democrats have been pushing to include the provisions in an unemployment-benefits bill, which has been held up by a disagreement with Republicans over other proposed amendments. Senate Banking Committee chairman Christopher Dodd, a Connecticut Democrat, said he expects the chamber to vote on the tax-credit plan within a week.

The administration's statement didn't specifically endorse expanding the break beyond first-time homebuyers. Dodd expressed confidence President Obama would sign such legislation.

Lawmakers said they want to prevent home sales from slipping as the economy struggles to recover from the worst drop in home prices since the Great Depression. More than 1.2 million borrowers have claimed $8.5 billion of the $13.6 billion set aside for the homebuyer tax credits this year, according to the Treasury Department.

The Democrats' proposal would extend the credit to home purchases under contract by April 30 so long as they close the sale within 60 days. The measure would require those receiving the tax break to remain in their new homes for three years; otherwise, they would have to repay the credit.

Those buying homes worth more than $800,000 wouldn't be eligible for the credit, said Baucus. Lawmakers also said they won't extend the break beyond the new April 30 deadline.

"The American people should understand this — and the affected industries — this is the last extension," said Senator Johnny Isakson, a Georgia Republican. "Tax credits like this only work by creating the sense of urgency to take advantage of them."

Isakson estimated the new plan would cost $10.2 billion. Dodd said the plan wouldn't add to the government's budget deficit because lawmakers plan to finance it by delaying a tax break for multinational companies scheduled to take effect next year.