| January 7, 2008 |
By Brian Catalde
NAHB President and
Jerry Howard
NAHB Executive VP and CEO |
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Just in time for the holidays,
NAHB-supported legislation on mortgage debt relief was approved by Congress on Dec. 18 and signed into law by President Bush two days later. The measure, which will help struggling home owners avoid foreclosure, is the latest positive step to be taken toward resolving the credit crunch and restoring balance to the nation's housing markets.
For months, NAHB has lobbied Congress to approve this bill that will provide a temporary, three-year change to the tax code eliminating any taxes home owners might face when banks renegotiate the terms of a home loan and forgive a portion of the outstanding mortgage debt. The newly signed law caps untaxable forgiven debt at $2 million and applies only to principal residences. Previously, forgiven mortgage debt was required by law to be taxed as ordinary income, which forced many struggling home owners to seek foreclosure rather than a loan restructuring. This three-year fix removes the disincentive to work out loans with banks and is an important step toward helping financially strapped borrowers and limiting the number of homes going back on the market.
The legislation also includes an NAHB-supported provision that extends the deductibility of mortgage insurance for another three years. By enabling mortgage insurance premium payments to be deducted, homeownership is made more affordable for thousands of families who now will be able to purchase a home without having to resort to more costly subprime or predatory alternatives. Read NAHB's press statement for more, or contact Greg Brown at x8421.
NAHB Member Benefit: NAHB has been pushing hard for essential tax reform that can help resolve the mortgage credit crunch and get housing markets back into balance. Such measures as the Mortgage Foregiveness Debt Relief Act of 2007 can help keep owners from losing their homes, avoid adding to an already overstocked inventory of homes on the market, and safeguard property values in surrounding neighborhoods.
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2008 will bring improvements to the housing market
 as builders work down inventories of unsold homes and buyer demand starts catching up to supply, NAHB's EVP & CEO, Jerry Howard and Chief Economist, Dave Seiders, told participants in our year-end news confernce on Dec. 20. Discussing the outlook for housing in 2008, Jerry and Dave explained that – with help from Congress and an accommodating policy from the Federal Reserve – the housing industry should begin its recovery in this year's second half. And, emphasizing that "many smaller markets that did not experience overheating in the 2003-2005 period are still performing at a relatively healthy level," Jerry noted that "if you balance those markets against those that are undergoing major corrections, we see a solid recovery down the road." Seiders' forecast is based on several assumptions, including that the economy will avoid recession, Congress will pass key reforms to address the subprime lending crisis and the central bank will be ready to step in if needed to keep the economy moving forward. Along these same lines, Jerry said that Congress must act quickly to pass an FHA modernization bill and legislation to reform Fannie Mae and Freddie Mac so they can play a larger role in restoring stability in the mortgage markets. Read more in our press release, or contact Paul Lopez (x8409) for help with related media inquiries.
NAHB Member Benefit: NAHB's economic teleconferences help provide the media with a better perspective of current market trends and where they are headed, and help 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 and discouraging uninformed and unfair reports on market conditions.
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Builder confidence remained unchanged for a third straight month
 in December, according to the NAHB/Wells Fargo Housing Market Index, released Dec. 17. The report indicated that builders' views of conditions in the single-family housing market haven't changed for a significant period, and provided what Chief Economist Dave Seiders indicated were "clear signs of stabilization in the HMI." At this point, he said, many builders are bracing themselves for the winter months when home buying traditionally slows, scaling down their inventories and repositioning themselves for the time when market conditions can support an upswing in building activity – most likely by the second half of 2008. The HMI's component index gauging current sales conditions for newly built single-family homes improved by a single point in December, while the index gauging sales expectations for the next six months rose two points. However, the index component gauging traffic of prospective buyers fell three points for the month. Read more in our press release and see the HMI tables online, or contact Gopal Ahluwalia (x8480) or Ashok Chaluvadi (x8482) for help interpreting the HMI data. For help with media inquiries, please contact Paul Lopez (x8409).
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.
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An increase in FHA multifamily mortgage insurance loan limits
 that was sought by NAHB was included in an Omnibus appropriations bill that cleared the House and Senate and was signed into law by President Bush just before the holiday recess. Among other things, the massive bill authorizes the HUD Secretary to increase, by regulation, the basic maximum mortgage limits by not to exceed 170% (previously 140%) in any geographical area where the Secretary finds that cost levels so require. It also authorizes the Secretary to increase the basic maximum mortgage limits by not to exceed 215% (previously 170%) in high-cost areas where the Secretary determines it is necessary on a project-by-project basis. Get more information by contacting Claudia Kedda, x8352.
NAHB Member Benefit: NAHB sought this change because there are many high-cost areas of the country where FHA multifamily mortgage insurance cannot be used because the loan limits have been too low.
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Builders wisely put the brakes on home production in November
 according to the latest government data, released Dec. 18. Nationwide housing starts declined 3.7% for the month to a seasonally adjusted annual rate of 1.19 million units, with single-family starts down 5.4% and multifamily starts remaining virtually unchanged. "Builders are doing exactly the right thing by slowing production and allowing demand for new homes to catch up with supply," noted NAHB President Brian Catalde in NAHB's official statement on the data. Added NAHB Chief Economist David Seiders, "It's no surprise that builders are starting fewer homes and pulling fewer permits for new home construction at a time when home buyer demand is weak and there's a heavy supply of vacant homes on the market. We expect the supply-demand imbalance to improve during the early part of 2008, supporting the early stages of recovery in starts and permits during the second half of next year." Permit issuance for new single-family homes declined 5.6% for the month to a seasonally adjusted annual rate of 764,000 units, while permits for multifamily production rose 7.5% to a 388,000-unit rate. Read NAHB's press release or see the government's official figures online.
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Save the date for NAHB's annual Legislative Conference on April 30
 and don't miss out on participating in the most important grassroots lobbying event of the year for our industry. The timing of our 2008 Legislative Conference – a full six weeks earlier than the 2007 conference – is particularly significant considering the ongoing shakeout in the subprime mortgage sector and its repercussions on the housing market. NAHB members from across the country are strongly encouraged to travel to the nation's capital to help urge their representatives and senators to support policies that will stabilize the housing market, reduce foreclosures, restore confidence in the credit markets and keep the economy moving forward. Especially in these challenging times – and just ahead of a major election day – your participation can make a huge difference as various interest groups compete to push their agendas in Washington. A strong builder turnout on April 30 will send a powerful message to members of Congress that housing must remain a top national priority. For more information, contact Molly Murray (x8282).
NAHB Member Benefit: The annual NAHB Legislative Conference provides an ideal opportunity for association members to share their concerns on housing-related issues with lawmakers on Capitol Hill.
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Farewell to NAHB Life Director Robert Holmes,
 a prominent Southern California contractor for more than 50 years and a past president of the California Building Industry Association (CBIA) who passed away on Dec. 3 at the age of 86. An executive at California-based Oltmans Construction Co. for 45 years, Robert was named the CBIA's "Builder of the Year" in 1971 and was elected a lifetime delegate for the association. He served as CBIA president from 1976 to 1977 and earned several honors for his community involvement and good citizenship. A World War II veteran, he served in the U.S. Navy with the SeaBees in the South Pacific. Our deepest sympathies go to Robert's wife, son and grandchildren, who along with his colleagues and friends will miss him terribly.
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