| October 22, 2007 |
By Brian Catalde
NAHB President and
Jerry Howard
NAHB Executive VP and CEO |
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Frank assessments of the ongoing housing correction
were offered by Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke in separate speaking engagements last week.
 Both officials characterized the current housing downturn as the most serious threat to the U.S. economy in the near-term, despite reasonably good U.S. economic performance so far this year. Speaking at the Georgetown University Law Center, Secretary Paulson noted that "The ongoing housing correction is not ending as quickly as it might have appeared late last year. And it now looks like it will continue to adversely impact our economy, our capital markets and many home owners for some time yet." While Paulson said he believes "we have a healthy, diversified economy that will continue to grow," he also cautioned that "the housing decline is still unfolding and I view it as the most significant risk to our economy. The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth." Paulson advocated several steps toward a resolution of mortgage market problems in his speech, including the government's new HOPE NOW program to assist distressed borrowers, changes in laws and regulations that govern mortgage lending, and Senate action on several House-passed measures that address NAHB policy concerns – including bills dealing with FHA modernization, mortgage debt forgiveness and reform of the housing-related Government Sponsored Enterprises.
For his part, Fed Chairman Ben Bernanke, in a speech before the Economic Club of New York, acknowledged that there has been further weakening of the housing market in the period following the Fed's latest move to cut short-term interest rates by half a percentage point. Bernanke noted that "The further contraction in housing is likely to be a significant drag on growth in the current quarter and through early next year." Even so, both he and Paulson noted that the ongoing adjustments in mortgage and credit markets should help the financial system emerge, in Bernanke's words, "healthier and more stable than before."
Read the full-text of Paulson's and Bernanke's comments online, or stay tuned for this report's coverage of next week's Fall Construction Forecast Conference for more expert views on the housing downturn from NAHB Chief Economist David Seiders and other conference participants.
NAHB Member Benefit: For NAHB members-only resources and information pertaining to the credit crunch and the challenges of today's housing markets, visit our Web site at: www.nahb.org/toolkit.
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Testifying on the effectiveness of lead-safe renovation
and repair practices used by professional remodelers to reduce lead levels in older homes, NAHB Remodelers Chairman Mike Nagel appeared before the Senate Environment and Public Works Committee on Oct. 18. Urging Congress to work with the relevant federal agencies to coordinate efforts, fully fund critical lead-safe training programs and effectively use combined resources, Nagel cautioned against imposing inappropriate and costly regulatory burdens on remodelers that would make it cost-prohibitive for consumers to hire trained professionals or that could lead to further proliferation of potentially harmful do-it-yourself projects. Appearing on behalf of NAHB, Nagel, a professional remodeler and president of Chicago-based design-build firm Remodel One, explained that "Professional remodeling, renovation and repair work performed by knowledgeable, trained contractors can serve as an agent against spreading lead hazards in older homes." He noted that research confirms that lead-safe remodeling and renovation lowers lead levels in older homes and that new hazards are not created when typical remodeling and renovation activities are undertaken by trained professionals. Read our press release for more information, or contact Elizabeth Odina at x8570.
NAHB Member Benefit: By supplying expert testimony to Congress on lead-safe renovation and repair work, NAHB hopes to avoid costly and unnecessary regulatory burdens that would only apply to professional remodelers and thereby encourage more do-it-yourself projects that could -- in contrast to the intent of the new regulations -- lead to greater lead hazards in homes.
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Opposing attempts to federalize the state building code process,
 NAHB member Frank Thompson testified on behalf of our 235,000-member association before the House Small Business Committee on Oct. 17 about the tremendous success of ongoing voluntary energy efficiency programs. He simultaneously urged the removal of a provision in energy bill H.R. 3221 that would create a new code-writing role for the Department of Energy for states that fail to achieve significant above-code benchmarks. "Congress should be promoting voluntary energy efficiency programs, extending tax incentives for highly efficient new home construction and protecting housing affordability from arbitrary building code increases when adopting new energy policy," said Thompson, a home builder from Pennsylvania. Citing the many ways in which home builders have made energy efficiency and green building a priority over the years – including NAHB's ongoing efforts to establish the first-ever ANSI-certified green home building standard – he explained that "establishing mandatory benchmarks and rigorous federal oversight for state building codes would subvert the consensus-based code development process, violate states' rights and impose unwanted and exorbitant costs on home buyers." Thompson also called on Congress to extend and expand federal tax credits that passed as part of the Energy Policy Act of 2005, noting that this would encourage construction of new energy-efficient homes, promote the use of energy-saving home improvements for existing homes and spur innovations that will result in even greater energy savings in housing construction. Read more in our press release, or contact Elizabeth Odina (x8570) for details.
NAHB Member Benefit: NAHB represents the concerns of our home builder members and communicates their issues pertaining to the practicality, safety and affordability aspects of proposed changes to national model building codes. As a result, local communities wind up adopting more efficient, more sensible and safer codes that allow homes to be more affordable and better built.
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Builder confidence was further shaken this month
due to continuing problems in the mortgage market, substantial inventories of unsold units and the perceived effects of negative media coverage, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), released Oct. 16. The HMI declined two additional points to 18 in October, its lowest point since the series began in 1985. Reports from builders in the field indicate that many prospective buyers are still holding out for better deals, and in fact may have unrealistic expectations regarding new-home prices as well as how much they can expect to receive for their existing homes. While two of the HMI's three component indexes showed declines, the positive news was that the other component held steady this month. The index gauging sales expectations for the next six months remained unchanged at 26, indicating that builders believe they are taking the right steps to reduce inventories and position themselves for the market recovery that lies ahead. NAHB's housing forecast indicates that home sales should stabilize within the next six months and show significant improvement during the second half of next year. Read our HMI press release or see the HMI tables online for details. Contacts: Gopal Ahluwalia (x8480) and Ashok Chaluvadi (x8482).
NAHB Member Benefit: NAHB's economic surveys and analysis help our members achieve a better understanding of current market trends and where they are headed, while our media outreach in this regard helps to firmly establish NAHB as the credible source of information on the housing industry nationwide. This credibility with the media ensures that accurate data on the housing market is transmitted to potential home buyers and the public at large, thereby discounting sensationalized accounts of market conditions that may affect your client's decision to purchase a new home.
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A 10.2% decline in housing starts for September
was mostly centered in the multifamily sector, where a signficant uptick had been registered in the previous month, according to the latest government figures, released Oct. 17. The decline brought overall housing starts to a seasonally adjusted annual rate of 1.19 million units, the slowest pace since March 1993's 1.08-million-unit rate. Single-family production registered a 1.7% decline to a 963,000-unit rate, while multifamily production posted a 34.3% decline to a 228,000-unit rate. If nothing else, the report indicates that builders are taking the necessary steps to narrow the supply of unsold units on the market as buyer demand continues to be adversely affected by tightened lending standards and concerns about negative media reports on the housing market. NAHB Chief Economist David Seiders noted that his latest forecast anticipates some further downward movement in housing production going into next year, at which point starts should begin to stabilize as sales turn upward in the second quarter. More concerning was the government report's data on building permit issuance, which can be an indicator of future building activity. Permits fell 7.3% in September to a rate of 1.23 million units on a 7.1% decline in single-family permit issuance to 868,000 units and a 7.7% decline in multifamily permits to 358,000 units. Read our press release or see the government report online for more.
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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Nominations for Community Service Awards are due by Nov. 12,
 so hurry to take advantage of this great opportunity to spotlight the philanthropic endeavors of your colleagues and yourself. Builders, remodelers, and developers who give back to their communities are encouraged to submit nominations for the 2007 National Housing Endowment Builder Achievement Award for Outstanding Community Service. The award honors NAHB members who demonstrate an exceptional committment to bettering their communities. 2007 honorees will be recognized at an awards ceremony during the 2008 IBS in Orlando. Eight awards will be presented, with each honoree receiving a donation to the charity of their choice in amounts ranging from $1,000 to $10,000. Winners will also receive marketing materials to share with their customers, peers, the community and the media. Get a complete description of eligibility requirements and an entry form online at www.nahb.org/builderachievement or via the National Housing Endowment Web site. Contact: Gwyn Donohue (x8447).
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NAHB's Construction Forecast Conference happens this week!
.gif) Don't miss this very important event, which takes place on Wednesday, Oct. 24 and is viewable via live Webcast for those who can't attend in person. Get all the information you need on our Web site or by contacting the NAHB Office of the Registrar at 800-368-5242, x8338.
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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