| September 25, 2006 |
By David Pressly
NAHB President and
Jerry Howard
NAHB Executive VP and CEO |
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Helping you successfully navigate the evolving housing market
is the object of a substantial new resource called "Back to Basics: NAHB's Toolkit for a Changing Environment" that was unveiled during our Fall Board of Directors meeting last week in Salt Lake City.
 Developed by a wide range of experts across the NAHB federation and available exclusively to NAHB members, this online business resource contains valuable information on tried-and-true benchmarking strategies; financing tools to help sell your homes; marketing campaigns and research; internet advertising; construction financing and other topics. Realizing that only a small percentage of NAHB's builder members have been in business through a market downturn, the idea for a sort of clearinghouse of such information for our members was first envisioned by NAHB Vice President/Secretary Joe Robson and the State Representatives during the Summer Executive Board meeting. After a very quick turnaround, the resulting project was launched at the Fall Board as a comprehensive set of information on NAHB's Web site that will continue to be updated and added to in the coming weeks and months. Your suggestions for additional helpful materials are more than welcome, so please give it a look and spread the word! Contact: Jay Shackford, x8406.
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Breaking news of a big win for builders on construction-site dust
came Sept. 21, with word of the EPA's decision to heed the advice of science and industry and drop its proposed daily standards for coarse particulate matter. Compliance costs for these standards would far outweigh their benefits, amounting to billions of dollars per year. NAHB and its members can take credit for this victory, having submitted extensive comments, provided testimony at EPA-sponsored public hearings and urgently lobbied Administration officials to apply some common sense to the proposed standard. While immediate press attention focused on the so-called "soot standard" for fine particulate matter, home builders were concerned about coarse particulates, or dust. NAHB's position was that the dust from construction sites is no different from that thrown up by a windstorm or a farmer's tractor, and does not require additional regulation. Thankfully, the EPA has agreed with this argument.
The proposed standard would have tightened the threshold for allowed coarse particulate emissions by more than 50%, but would have exempted the largest sources of dust emissions (agriculture and mining) while forcing home builders and others in the construction industry to comply. Builders in three of the top 10 housing markets would have been affected – Las Vegas, Los Angeles and Phoenix. Based on 2004 building permit totals, it would have hiked compliance costs for 230,000 homes, amounting to at least $5.75 billion per year! Read more about this great victory in the Sept. 25 edition of NBN Online, or contact Gary Suskauer at x8327.
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Look for a housing rebound starting in mid-2007.
That's what NAHB Chief Economist David Seiders told the Senate Economic Policy and Housing Transportation Subcommittees on Sept. 13. Seiders mentioned the following factors for his reasoning that housing numbers will begin flattening out by mid-next year and gradually move back up toward trend by late 2008:
- Payroll employment is proceeding at a decent and sustainable pace;
- Household income growth is strengthening as the economic expansion proceeds;
- The interest rate structure is favorable, mortgage credit is readily available and monetary policy has stabilized following a long run of upward rate adjustments; and
- Energy prices have receded from record highs earlier this year.
Seiders advised lawmakers, however, that there are several downside risks to his housing and economic forecast – namely, the possibility of future spikes in interest rates or energy prices, a surge of homes being put back on the market by investors/speculators, and uncertainties regarding the inventory of unsold new homes.
Dave also carried the association's insights to the White House on Sept. 7 for a discussion with the chairman of the Council of Economic Advisers, Edward Lazear. "As long as the economy remains in good shape, interest rates remain close to current levels, energy prices remain below recent highs and sellers of new and existing homes adjust prices or offer incentives to meet current market realities, the rest of the housing market correction should be of limited depth and duration," he told Lazear. Read more about Seiders' congressional testimony in our press release, or see his Eye on the Economy report for the Chief Economist's most up-to-date analysis of the economy and housing markets.
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NAHB's official new membership total: 235,000!
 At NAHB's Fall Board of Directors meeting in Salt Lake City, 2006 Membership Committee Chairman Larry Stege announced that membership in the NAHB federation has grown again, reaching a recordbreaking 235,000. This is up from our last official membership total of 225,000, which was also a new record. This impressive gain would not have been possible without the help of all those Spike Club recruiters who spread the word about the benefits of NAHB membership to everyone who would listen. Due to their efforts and those of all our EOs and others who've helped recruit and retain new members this year, NAHB's voice representing America's home builders and their affiliates is stronger than ever in the halls of Congress, in the courts of the nation and in the government regulatory arena. Congratulations and thanks to all those who've helped boost NAHB and its members to greater heights this year, and especially to Larry for his continuing herculean efforts! Contact: Emily Fitzsimmons, x8354.
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Builders are cautious and housing starts are down
according to the latest data from NAHB and the U.S. Census Department. On Sept. 18, we reported that the NAHB/Wells Fargo Housing Market Index (HMI), a key measure of builder confidence, fell three points in September to 30, its lowest level since February of 1991. NAHB Chief Economist David Seiders reasoned that the increasingly cautious attitude reflected in the HMI (the index has declined for the past eight consecutive months) reflects the declining sales, increasing cancellations and rising inventories of unsold units that many builders are now confronting. Meanwhile, many potential buyers seem to be holding off on a home purchase to see how the market shakes out. Even so, Dave noted that long-term fundamentals in the housing market are expected to be very favorable in the years to come (see story above, Look for a housing rebound starting in mid-2007). Read our press release or the HMI tables, or contact Gopal Ahluwalia (x8480) for more info.
On Sept. 19, the U.S. Census Department revealed its latest data on housing starts for August, showing a 6% decline to a seasonally adjusted annual rate of 1.67 million units. On the single-family side, starts declined 5.9% to a 1.36 million-unit rate, while multifamily starts declined 6.7% to a 305,000-unit rate. Speaking to the press, Seiders emphasized that home buying conditions "actually are quite favorable at the time," citing the diverse array of homes on the market, historically low mortgage rates, softening house prices and growth in household incomes. Read more in our press release, or contact Paul Lopez (x8409) for help with related media inquiries.
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Last chance! Tell the government what you think
about necessary reforms to the Endangered Species Act and storm water enforcement programs as part of a unique federal initiative called "cooperative conservation" wherein the Bush Administration is soliciting comments from the regulated community. We told you about this program in a previous issue of The Monday Morning Briefing Letter (read: "The federal government is listening up"), and NAHB President-Elect Brian Catalde asked members of the Board of Directors to participate during his Advocacy update at our meeting in Salt Lake City. About two dozen "listening sessions" have been set up across the country, and many NAHB members have indeed participated to provide the builder's perspective on necessary changes. But even if you couldn't attend one of these sessions, there's still time to make a difference. You have until Sept. 30 to submit written comments on ways to improve environmental regulations. First, go to www.nahb.org/listeningsessions to get all the background and content you may need for your letters. Then visit http://cooperativeconservation.gov and tell it like it is! Contact: Susan Asmus, x8538.
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Updating the Federal Reserve Chairman
about the state of the nation's housing markets is an important role that NAHB is honored to have on a regular basis. Most recently, a delegation from NAHB including President David Pressly and other Senior Officers visited Federal Reserve Board headquarters on Sept. 5 for a meeting with five of the six Federal Reserve governors, including Chairman Ben Bernanke. The Fed has been watching the housing sector very closely to gauge the impact of its monetary policies, and our delegation sought to ensure that Bernanke clearly understands the threat that higher interest rates could have on our industry. Indeed, virtually all of the 12 Fed districts reported declines in home sales and construction activity in the latest "Beige Book" survey prepared by the Federal Reserve Bank of New York. Also, most districts indicated substantial increases in inventories of unsold homes. Thankfully, in keeping with our urging of the Fed to refrain from further rate hikes, the latest meeting of the Federal Open Market Committee on Sept. 20 ended with the Fed holding firm and declining to tighten monetary policy further at this point. However, the Fed did not rule out the possibility of additional tightening in the near future. Read more in the latest edition of NBN Online.
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Resolutions approved at the Fall Board of Directors meeting
in Salt Lake City this month are now available for viewing online. The newly established NAHB policy includes:
1) A resolution outlining NAHB's stance on inclusionary zoning;
2) A resolution updating NAHB's stance on urban growth boundaries;
3) A resolution reaffirming NAHB's existing policy on low-cost fire sprinklers;
4) A recommendation calling on NAHB to study the impact on the housing
market and economy of Congressman John Linder's "fair tax" proposal;
5) A recommendation calling on NAHB to consider the consequences on
commercial development and construction practices when adopting
policies regarding impact fees and land use; and
6) A resolution calling on NAHB to work with the U.S. government and
foreign countries and industries to promote the availability of high-quality
and affordable supplies of lumber and other key building materials.
Resolutions Committee Chairman Marsha Elliott's memo summarizing the approved policies from the latest meeting is available to NAHB members online. Contact Jay Shackford (x8406) for more info.
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NAHB's Quick Issues Index
 documenting the latest advances on our top Advocacy issues was updated for the latest Board of Directors meeting and is now available to you online. Readers of this report will recall that this particular report is the brainchild of NAHB President-Elect Brian Catalde, who as oversight officer for NAHB Advocacy this year directed its development as an efficient means of updating our leadership and providing contact information and Web addresses telling you where to go for more data on a given subject. The Quick Issues Index is updated prior to every meeting of the NAHB Executive Board and is available for viewing by members only at www.nahb.org/issuesindex. Contact: Samantha Ehrhart (x8450) for more info.
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Firming rental markets are pushing stocks higher
according to the latest NAHB Multifamily Stock Index (MFSI), released Sept. 12. "In many markets nationwide, the supply of new rental units has not kept pace with demand, and that is pushing up occupancy rates, rents and profits," noted NAHB Multifamily Leadership Board Chairman Leonard Wood. In fact, the MFSI hit its highest reading of all time this August. The index tracks the total returns (including capital gains and dividends) of 24 publicly traded firms that are principally involved in the ownership and management of apartments. At 3,328, the index currently stands 30% above its year-ago level. In comparison, the S&P 500 index with dividends reinvested is currently about 9% higher than it was one year ago. Moreover, the MFSI continues to dramatically outperform the S&P over even longer periods — since December 1998, it has risen 232% while the S&P 500 with dividends reinvested has gained just 19.6%. See our press release online. Contacts: Ann Marie Moriarty, x8350 and Elliott Eisenberg, x8398.
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An extended deadline for NAHB's SAFE Awards
gives you some additional time to enter. The Safety Award For Excellence (SAFE) is NAHB's newest award program. It aims to honor speciality trade contractors, remodelers, light commercial and multifamily builders, as well as government officials and state and local HBAs who have made important contributions to improving safety in the home building industry. Award winners will be celebrated at a luncheon banquet during the 2007 International Builders' Show in Orlando. Be sure to take advantage of this extended time frame - visit www.nahb.org/SAFE for more information. There you can download a printable entry form or enter online. Contact Delicia Jenkins, x8163.
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