| October 2, 2006 |
By David Pressly
NAHB President and
Jerry Howard
NAHB Executive VP and CEO |
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HUD will not raise FHA multifamily mortgage insurance premiums
as it had proposed, thanks in large part to comments in opposition to the move that the agency received from members of Congress and NAHB.
 News of this excellent development reached NAHB late last week, when FHA Commissioner Brian Montgomery called to let us know of his agency's decision. The official announcement is now on HUD's Web site. It reports that the premiums will remain at their current levels, just as NAHB has been urging for the past several months. When HUD first issued a notice of its intention to raise the mortgage insurance premiums (MIPs) on June 28 of this year, it announced a 30-day public comment period. NAHB submitted comments, encouraged comments from our members and lobbied Congress to oppose the increase. We also drafted an industry comment letter and recruited 11 housing organizations to sign it. By the deadline, 359 comments had been received, including a letter signed by 121 members of the U.S. House of Representatives and 26 U.S. Senators. The bulk of these expressed strong opposition to the MIP increases for FY 2007.
The FHA multifamily mortgage insurance programs are an important source of financing for rental housing that serves low- and moderate-income households. Increasing the mortgage insurance premium so dramatically could have forced many builders to seek less costly financing elsewhere in order to avoid either raising significantly more equity or raising rents by as much as 5% to cover the higher costs. In some cases, projects would not have gone forward. Read more on this important development in our press release, or contact Claudia Kedda at x8352.
NAHB Member Benefit: Had HUD's proposal been implemented, it would have significantly increased the mortgage insurance premiums that multifamily developers would be required to pay for several key FHA programs, including the Section 221(d)(4) program, which many developers use to insure mortgages for newly constructed rental housing. In that case, the MIP would have jumped from 45 basis points to 77 basis points as of Oct. 1, seriously impacting our members as well as the affordability of rental housing for consumers. NAHB members who would have been affected by the increase were informed of the proposal, recruited to help provide public comments, given the appropriate background materials to do so, and faithfully represented by NAHB's regulatory and congressional lobbyists. For our multifamily members, this is one more instance in which your membership has saved you thousands of dollars annually, easily surpassing the cost of your NAHB dues.
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Mainstream economists agree on the outlook for housing
 and the economy, as discussed during NAHB's news teleconference held Sept. 25. Setting the tone and theme for most of the participants, NAHB Chief Economist Dave Seiders led off with his housing and economic forecast. Highlights included 1) Seiders' prediction that the housing downturn will begin flattening out by mid-2007 with the market returning to trend in 2008; 2) his expectation that the Federal Reserve has completed its monetary tightening in the current cycle – an indication that mortgage rates should remain low through the near future and provide a good environment for home buyers to act; and 3) his assessment that the overall economy is in good shape to withstand housing's bumpy trajectory as other sectors step in to provide needed strength.
Also speaking in the teleconference were Global Insight Chief Economist Nariman Behravesh, JPMorgan Chase Managing Director Jim Glassman and Daiwa Securities America Chief Economist Mike Moran. Each offered reasonably similar forecasts for housing and the economy. On a strongly optimistic note, Glassman explained, "It's obvious that we're undergoing a badly needed adjustment in the housing market right now — the question is if it's an orderly adjustment or a disorderly one. Contrary to the way many media reports have portrayed it, I say it's an orderly process." You can download the economists' presentations from the teleconference via our Web page, or read more about the event in the Oct. 2 edition of NBN Online.
NAHB Member Benefit: NAHB conducts regular media teleconferences such as the one described above to help ensure that media sources and the consumers who read them have all the facts about the current direction and conditions of the housing market, thereby allaying fears of a "housing bubble" and other media-created misconceptions while getting the message out that now is a good time to buy a home. Such events provide crucial context for housing data such as the new-home sales figures that were released the same day as the above teleconference, and help confirm NAHB as a credible source for financial, trade and general interest news publications. Our media outreach helps you, the member, by focusing the media's attention on the facts rather than the fiction and thereby avoiding undue consumer alarm. Contact Paul Lopez (x8409) for help dealing with media inquiries on the slowing housing market.
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Calling on Congress to pass crucial property rights legislation,
NAHB urged support this week for the Private Property Rights Implementation Act, H.R. 4772, which would ensure that property owners can litigate their Fifth Amendment takings claims in federal court. Commending House Majority Leader John Boehner for his efforts to bring the bill to a vote in the very near term, NAHB Executive Vice President and CEO Jerry Howard explained why this legislation is so important to our members and private property owners across the land. Under current law, landowners face a classic Catch-22 situation, wherein they are required to litigate their property takings claims in state court before a federal court will rule on them – yet, once a takings claim is heard in state court, this precludes review by a federal court. H.R. 4772 "places Fifth Amendment takings claims on par with the rest of the Bill of Rights," said Jerry. Read more in our press release and get the latest on this legislation's progress in NBN Online. Contact: J.P. Delmore, x8412.
NAHB Member Benefit: A prime mission of NAHB is to serve as the voice of the nation's home builders when legislative actions are considered by Congress and to make sure that our members' views are heard loud and clear by lawmakers. NAHB is supporting this bill to affirm your constitutional right to seek just compensation in federal court when a government action reduces the value of your property. This would not only ensure against the unfair loss of your property without you being paid for it, but would potentially force greater caution by governments that are considering taking properties for a public use.
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The growing influence of Latino home buyers
 on new-home designs and builder marketing strategies was the focus of an NAHB news teleconference held Sept. 21 with former HUD Secretary Henry Cisneros. A new book edited by Cisneros and available from BuilderBooks is called "Casa Y Communidad: Latino Home and Neighborhood Design," and includes writings by leading experts on the Hispanic housing market along with strategies for connecting with these buyers. According to Cisneros, builders can begin to design housing product that fits the specific needs of Latinos and gives the builder a marketing advantage in this rapidly expanding market. Much of the "tweaking" that needs to be done to existing designs is fairly inexpensive and easy, said Cisneros, who offered the following specific examples:
- Constructing garages so that they can be easily converted into bedrooms
- Providing kitchens with gas ranges that are more suitable to Latino recipies requiring cooking over an open flame
- Building in close proximity to public transit
- Providing bigger driveways that can accommodate the additional cars of a Latino household with more family members in the workplace
Read more about the Sept. 21 teleconference and Cisneros's book in the Oct. 2 edition of NBN Online.
NAHB Member Benefit: NAHB members get a $5 discount on the book "Casa Y Communidad" when they order it from BuilderBooks.com. NAHB also seeks to expand our members' access to important information on emerging markets through education programs at the IBS, advice on our Sales & Marketing Channel at www.nahb.org, and also through a newly implemented Hispanic Outreach working group that is researching ways for our federation to embrace Latino contractors.
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A surprising 4% bounce in new-home sales this August,
 revealed in the latest data released by the U.S. Census Department on Sept. 27, is a welcome development tied to lower mortgage rates and enticing builder sales incentives, but is likely not a harbinger of a sustained turnaround in housing markets just yet. The increase, to a seasonally adjusted annual sales rate of 1.05 million units, was reported simultaneously with a significant downward adjustment to July's new-home sales numbers, which gave that month the lowest reading since March 2003. Even so, according to NAHB Chief Economist Dave Seiders, "The near-term prospects for monetary policy and mortgage interest rates will be supportive of housing demand going forward." Also in our press release, NAHB President David Pressly drove home the message that with mortgage rates nice and low and the attractive builder incentives that are being offered, from a consumer perspective this is definitely "a good time to buy.”
Three out of four regions posted sales gains in August. The Northeast posted a 21.7% gain, the Midwest a 12.2% gain and the South an 11.1% gain. Meanwhile, the West posted a 17.7% decline. The inventory of new homes for sale decreased slightly in the month to 568,000 units – a 6.6 months' supply at the current sales pace. Completed homes for sale were 26% of that inventory, while units under construction accounted for 55% and units for sale that were permitted but not yet started accounted for nearly 19%. Contact Paul Lopez (x8409) for help dealing with related media inquiries.
NAHB Member Benefit: NAHB performs regular media outreach when government housing figures are released to provide critical perspective on the condition of the housing market and reinforce our messages. In the current market downswing, we are particularly focusing on those messages regarding the positive factors of the market for potential home buyers who now have greater leverage, greater selection and favorable mortgage rates to help encourage them to move forward with a home purchase. Soon, your EO will be receiving a package of materials to help advance this messaging in your local market - stay tuned to this report for the latest developments or contact Jay Shackford at x8406.
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