(Corrects headline to make clear ISI thinks the tax credit will be phased out.)

Oct. 26 (Bloomberg) -- The U.S. Congress will probably phase out the tax credit for first-time home buyers, according to a note sent by ISI Group Inc.’s Washington research analysts.

“There could be an agreement reached as early today on the Reid/Baucus amendment that would PHASE OUT (not extend, as we originally understood when the idea was first proposed last week) the home buyer tax credit,” ISI analysts said in the note. “The phase out is worse than a straight extension and probably worse for housing than the consensus.”

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.

Last Updated: October 26, 2009 13:24 EDT