| October 30, 2006 |
By David Pressly
NAHB President and
Jerry Howard
NAHB Executive VP and CEO |
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Mid-2007 will be the turning point for the nation's housing market,
according to economists at NAHB's 2006 Fall Construction Forecast Conference on October 25. In the meantime, the correction now underway is unlikely to push the nation's economy into recession.
 The quicker-than-anticipated slowdown in housing activity, coming on the heels of several unsustainable boom years, is currently producing a significant drag on economic growth and could subtract a full percentage point from the GDP during this year's second half, said NAHB Chief Economist David Seiders. In all, the "peak-to-trough" decline in single-family housing starts is expected to amount to 25% over the period starting in the first quarter of 2006 and ending in the second quarter of 2007, he said. Much of that contraction is "already under our belts," noted Seiders, but the sizeable inventory of unsold homes that remains to be worked off means we're not yet seeing the light at the end of the tunnel.
Economists noted that the inventory situation may actually be somewhat worse than it has been portrayed by the Commerce Department to this point, since government statistics do not include homes that have been sold to a buyer who subsequently cancels the sales contract. NAHB surveys suggest that big builders' cancellations doubled in the third quarter of 2006 compared to the same time last year – although smaller companies have not been as impacted. Get complete coverage of the forecasting conference in this week's NBN Online, or contact Steve Melman for more info at x8245.
NAHB Member Benefit: NAHB's twice-a-year Construction Forecast Conference brings the expert analysis of the country's foremost economists within reach of our builder members, the media and financial analysts, who attend the one-day seminar to get the most accurate and up-to-date information on housing and economic trends available. As such, the conference solidifies NAHB's reputation as a primary source of information and aims to help participants make sound business decisions that will positively impact their bottom line.
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New-home sales rose 5.3% in September
to a seasonally adjusted annual rate of 1.075 million units, according to figures released by the Commerce Department on Oct. 26. While the increase may have seemed greater as a result of downward revisions to sales rates previously reported for each of the previous three months, other notable factors behind the gain include recent declines in mortgage rates and energy prices that have buoyed consumer attitudes and home buyer demand.
Another interesting item grabbing the headlines was Commerce's report that the median price of new homes sold in the month was $217,000 – 9.7% below what they were at the same time last year. However, monthly price numbers are notoriously volatile and, according to NAHB Chief Economist David Seiders, it's more instructive at this point to look at the median sales price for the entire third quarter. That number indicated a 1.7% decline on a year-over-year basis, which is "more reflective of what's actually going on in the housing market," he said.
Meanwhile, the inventory of new homes for sale fell for a second consecutive month in September to 557,000 units, or a 6.4-month supply at the current sales pace. Completed homes for sale accounted for 28% of that inventory, while units still under construction represented nearly 56% and units for sale that were permitted but not yet started represented 16%. Read more in NAHB's press release, or contact Paul Lopez (x8409) for help dealing with media inquiries.
NAHB Member Benefit: NAHB conducts regular and extensive media outreach when government housing figures are released each month to educate reporters about the historical context in which numbers should be viewed, discourage sensationalized accounts and ensure that home builders' views are represented. NAHB also assists our members in dealing with media inquiries regarding the latest government data.
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Builders challenging an OSHA policy
 that holds them responsible for ensuring the safety of workers employed by subcontractors on the job site presented their case to an Occupational Safety and Health Review Commission on Oct. 13. At the heart of the matter is an OSHA citation levied upon Summit Contractors, Inc. for failing to ensure that employees of a masonry subcontractor used adequate fall protection while working on scaffolds during construction of an Arkansas college dormitory. Recognizing the importance of this case to the entire home building industry, NAHB joined with the Texas Association of Builders, the Contractors' Association of Greater New York and the Greater Houston Builders Association to file a friend-of-the-court brief urging the commission to dismiss OSHA's citation. Our argument contends that a contractor's responsibility extends only to its own employees and that multi-employer liability is limited. The contractor should only be liable if its own actions created unsafe conditions, as opposed to when its subcontractors have created those conditions. In other words, "Each employer is responsible for the working conditions of his own employees," the brief said.
NAHB's interpretation of the law holds that OSHA generally has no statutory or regulatory authority to issue citations and levy fines against one employer for violations committed by another employer. Extending the contractor's responsibility would require a new rulemaking by the agency, subject to public hearing and comment. A decision is expected from the commission by the end of April 2007. Contact Rob Matuga (x8507) or read NBN Online for more information.
NAHB Member Benefit: NAHB's involvement in this case is aimed at avoiding a scenario where every builder would have to constantly and personally police the actions of subcontractors whenever they do work. As a practical matter, most builders don't have the workforce to do this, and it would be extremely costly and time-consuming. This is one more example of how NAHB is looking out for our builder members at regulators' every turn.
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The National Remodeling Hall of Fame Class of 2006
 was inducted during an NAHB Remodelors Council gala event in Chicago this month. Tapped for their outstanding lifetime achievements in the residential remodeling industry, NAHB Vice President of Research Gopal Ahluwalia and Kermit Baker of Harvard University's Joint Center for Housing Studies humbly accepted the honor. Both are renowned researchers and analysts of remodeling trends and activities. Their pioneering work has led to a much better understanding and appreciation of what is now a $200 billion market. Congratulations to Gopal and Kermit! Contact Jim Lapides (x8451) for more information.
NAHB Member Benefit: The NAHB Remodelors Council calls attention to the remarkable accomplishments in the constantly expanding field of professional residential remodeling through the National Remodeling Hall of Fame. Moreover, the induction of one of NAHB's own, Gopal Ahluwalia, recognizes the substantial contribution that he and NAHB have made in representing and serving as a valuable resource for the remodeling industry. Under NAHB, Gopal was at one time the only economist researching this industry and offering information to the public. He has created numerous reports and studies that offer meaningful data to suppliers and remodeling companies, and is responsible for the development of NAHB's quarterly Remodeling Market Index that surveys market conditions.
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Resources to combat fly-by-night contractors
in the storm-ravaged Gulf Coast region are available for HBAs and individual members to download for free from NAHB's Web site at www.nahb.org/disasterresources. Included at this site is a Public Service Announcement (PSA) as well as other valuable disaster communications resources that can be customized for your use. While these resources have been at the ready for many months now, a reminder about them was recently sent to EOs in Gulf Coast states following an article that appeared in USA Today calling attention to the recent moves of unscrupulous contractors. NAHB Public Affairs is here to help, so please do not hesitate to call us for assistance if this issue arises in your market! Contact: Niki Clark, x8061.
NAHB Member Benefit: NAHB has been very involved in helping our members to rebuild their lives and businesses following the devastating impacts of recent hurricanes. We've raised funds to help the victims, provided resources to assist area HBAs, and conducted substantial media outreach to emphasize the important contributions of builders in the rebuilding effort. Under NAHB's umbrella, the entire building industry has been able to rally to the support of our fellow Americans and hardworking colleagues throughout the affected region.
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