| October 20, 2008 |
By Sandy Dunn
NAHB Chairman and
Jerry Howard
NAHB Executive VP and CEO |
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Builder confidence took an expected heavy hit in October
from all the financial market upheaval in recent weeks, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), released Oct. 16.
 After having gained some ground in September, the confidence gauge declined three points this time around to hit a new record low of 14, with each of its component indexes also sinking to all-time lows. According to NAHB Chief Economist David Seiders, undoubtedly the numbers "reflect builder assessments of the recent events on Wall Street, the rapid deterioration of job markets and the corresponding weakness in consumer confidence." NAHB pointed to the report as clear evidence that an additional economic stimulus package is needed, including a substantial additional incentive to spur home buying. Said Seiders, "The impacts of the record-breaking housing contraction have spilled over to other key sectors of the economy and weighed heavily on financial markets, and stabilizing housing is now the best chance we have to limit the severity of recession." Every region posted declines in builder confidence as gauged by the HMI in October, with four-point declines registered in the Northeast and South, a three-point decline registered in the West, and a one-point decline posted in the Midwest. Read NAHB's press release and see the HMI tables online. Contacts: Gopal Ahluwalia (x8480) and Ashok Chaluvadi (x8482). For help with media inquiries, please contact Paul Lopez (x8409).
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Opportunities are available for builders to rehab foreclosed homes
 as part of the new Neighborhood Stabilization Program (NSP) that was included in the Housing and Economic Recovery Act passed by Congress this summer. Under the program, HUD is distributing nearly $4 billion to states and local communities to help them remove foreclosed and abandoned properties from the market in a process aimed at stabilizing neighborhoods that have been hit hard by the housing crisis. Following rules established by HUD, such homes can be purchased and rehabilitated, or if they are too deteriorated, they can be demolished and redeveloped. The funds may also be used to provide financing for eligible households to purchase these properties. States and localities may choose to administer the NSP program directly or by contracting with a third party. While the law does not permit any entity to make a profit on the sale of these homes, builders may earn developer fees as part of the rehabilitation or redevelopment costs. NAHB members should contact their local or state government to find out how the program will be implemented and what opportunities may be available for builders. For an NAHB summary of the program rules, click here. For information about the program from HUD, click here. Contact: Claudia Kedda, x8352.
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NAHB's response to a Today Show segment on fire sprinklers
 was quick and to the point this week. As part of Fire Safety Month, the morning news show hosted a representative from the Home Safety Institute and aired a home fire simulation that demonstrated how residential fire sprinklers are supposed to work. The footage was quite dramatic and meant to leave viewers with the impression that installing fire sprinklers in new one- and two-family homes will lead to an immediate and significant drop in fatalities. NAHB heard from many concerned members on this and responded right away to the show's producers.
We pointed out that mandating fire sprinklers in new one- and two-family homes will not make existing homes any safer, as well as that the sprinklers will not operate in all fires. We also reiterated the concerns that fire sprinkler systems can be difficult to maintain and costly to install, particularly for homes not connected to a public water system. Most of all, we praised the benefits of smoke alarms, which have greatly reduced fire-related fatalities and continue to make great strides in terms of innovative features such as wireless technology. In all, we set the record straight and called attention to the many concerns that home builders and buyers have about mandated sprinklers. For more on our response to the Today Show segment, contact Calli Schmidt, x8132. On a related note, for a comprehensive roundup of building code decisions made at the ICC final action hearings in Minneapolis, see the Oct. 20 edition of NBN Online.
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Paring down the inventory of unsold homes
continues to be a primary concern for home builders, as evidenced by the latest housing starts data released by the U.S. Commerce Department on Oct. 17. Commerce reported that nationwide housing starts declined 6.3% in September to a seasonally adjusted annual rate of 817,000 units, which is the slowest building pace since early 1991. Single-family starts fell 12% to a rate of 544,000 units, the slowest pace since August of 1982. Multifamily starts actually rose 7.5%, to 273,000 units, practically offsetting a big decline in the previous month. While lower than generally expected, the numbers were not surprising in light of our latest builder surveys (see first story above) and evidence of persistently high inventories of new and existing homes, weakening home prices, falling payroll employment and declining consumer sentiment, said NAHB Chief Economist David Seiders. NAHB again took this opportunity to emphasize that an additional economic stimulus that includes substantial measures to spur home buying will likely be necessary to limit the current recession. Also reported by Commerce on Oct. 17, permit issuance declined across the board in September. Overall permits fell 8.3% to a 786,000-unit rate, with single-family permits down 3.8% to 532,000 units and multifamily permits down 10.3% to 273,000 units. See our press release or the government's report online. Contact Paul Lopez (x8409) for help with media inquiries.
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An NAHB survey finds that credit tightened further for multifamily
 builders who were looking for acquisition, development and construction (AD&C) financing this summer. A total of 79% of those polled reported that the availabilty of new credit for building multifamily rentals or condos worsened during the June-to-August period compared to conditions in April and May. About 48% said they sought credit for multifamily construction this summer, primarily from commercial banks. Availability of credit for land acquisition and land development was even tighter, with 100% and 90% of respondents, respectively, reporting a worsening of conditions in June, July and August. About one-third of those participating in the survey actually sought credit for land acquisition or development in that period. For now, half of the survey's respondents said they are putting new multifamily rental construction on hold until the financing climate improves. Multifamily condo construction was reported to be on hold by 73% of respondents, land acquisition by 80%, land development by 86% and single-family construction by 60%. NAHB is engaged in multiple efforts to try to alleviate the credit crunch for AD&C financing at this time, including meeting with all of the federal bank regulators and key members of Congress. Our increased surveys of the NAHB membership provide essential data to further our efforts in this area. Read more on the survey findings in NBN Online, or contact Ann Marie Moriarty at x8350.
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A newly enacted tax credit for energy-efficient home improvements
 could be a great incentive that residential remodelers can use to encourage more customers to go green on their renovation projects in 2009. The IRS Section 25C tax credit for existing homes, which expired at the end of 2007, has been reinstated for all of 2009 as part of the financial rescue package that President Bush recently signed into law. Home owners can take advantage of it by having energy-efficient windows, doors, roofing and insulation installed as well as energy-efficient furnaces, air conditioners and heat pumps. Details on qualifying improvements are available at the IRS Web site. By becoming familiar with the model types and products that qualify for the credit, remodelers can help encourage their customers to make these improvements. However, home owners must submit the appropriate forms with their tax return. Read what records home owners need to retain and provide to claim the credit in the current edition of NBN Online. Contact: Kelly Mack, x8451.
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Helping real estate appraisers evaluate green building
 techniques and elements in new homes is the goal of a new course being offered by the Appraisal Institute for its members. This offering should facilitate recognition that energy- , water- and resource- efficient homes can command higher prices than traditionally built ones. NAHB's Green Building Subcommittee and staff are providing technical assistance to the Institute as it designs the content of the class. That content includes information on the popular NAHB National Green Building Program, including the National Green Building Certification administered by the NAHB Research Center. In all, the new course will discuss the growing acceptance of green building, review green products and materials, and help appraisers recognize how green building techniques can affect the applications of the cost, sales comparison and income capitalization approaches to the appraisal process. Registration and class location info is available in the education section of the Appraisal Institute's Web site. Contact: Call Schmidt, x8132.
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Rebuilding efforts following Hurricane Ike
 are now underway, and NAHB members who have expressed interest in providing products or building materials are encouraged to make donations through Gifts in Kind International. When Ike devastated portions of the Texas and Lousiana coasts back on Sept. 7, it left many residents homeless and millions without electricity for weeks. NAHB responded immediately, assisting local HBAs and FEMA with disaster efforts. Now that the focus has turned to rebuilding and recovery, there is a desperate need for tools and building materials. Gifts in Kind is thus asking corporate donors in the building industry to donate new, bundled building and repair supplies. The following items are among those most urgently needed: neutral tile flooring; beaded paneling, moulding, wainscoting, baseboard, door and window trim; finishing nails and nail guns; primer, paint (neutrals), rollers, sprayers and trays; commercial grade carpet; caulk guns and paintable (indoor/outdoor) caulk; lumber; sheetrock; electrical wiring and fixtures; plumbing; appliances; and bathroom fixtures. To donate products, complete the Product Donation Form and email or fax it to Doyle Delph at Gifts in Kind (FAX # 877-798-3192). Cash donations can also be made online. For more information on NAHB's disaster assistance resources, contact Ken Ford (x8228) or Gwyn Donohue (x8447).
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Three more great reasons to attend the 2009 IBS!
 Last week, we told you that legendary football coach and sports commentator Lou Holtz will be the keynote speaker for Grand Opening Ceremonies at the 2009 International Builders' Show this coming Jan. 20-23 in Las Vegas. But that's just the beginning. Each day of the show will open with a special session featuring one of three nationally recognized speakers from companies that have capitalized on innovation and turned challenges into opportunities. These speakers will each try to help IBS attendees navigate the downturn and position their companies for the market's eventual resurgence. On Wednesday, Jan. 21, our speaker is Andrew Winston, founder of Winston Eco-Strategies. Winston's presentation is titled: "Turning Green to Gold: Environmental Business Practices Drive Long-Term Growth." On Thursday, it's Kevin Freiberg, founder and CEO of the San Diego Consulting Group, whose presentation is titled "Boom! Blowing the Doors Off of Business as Usual: Seven Essential Choices to Skyrocketing Success." And on Friday, it will be Peter Hart, founder of Peter D. Hart Research Associates. Considered one of the top public opinion analysts in the country, Hart will discuss "Secrets From the Trend Tester: Changing Rules You Can Capitalize On." Read more about each of these fantastic speakers here. Get info on registration for the International Builders' Show here, and get hotel info here. Also check out NAHB's fantastic IBS Web site at: www.buildersshow.com/.
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NAHB mourns the loss of Raymond Becker,
 the 2008 chairman of the California Building Industry Association (CBIA) who passed away suddenly at the age of 59 at his home on Oct. 7. A 25-year veteran of the real estate development industry, Ray managed the development of large-scale master-planned communities involving more than 40,000 homes, as well as thousands of retail and industrial projects in Riverside, San Bernardino, Orange and San Diego counties in the course of his career. In the beginning, he attended California State University-Northridge, and spent a 10-year stint in the U.S. Army's Intelligence Branch. He then started his development career under the tutelage of John D. Lusk, and in the early 1980s was division manager for Lusk's fledgling division in the Inland Empire. Later, he became senior vice president for Lennar Communities' Southern California Division, and in 2004 he joined DMB Associates to develop a new town on 4,500 acres at the south end of Silicon Valley. Ray first got involved with the BIA in 1982, and in 1987 he served as president of the Riverside County Chapter of the BIA of Southern California (BIA/SC). By 2003, he was president of the BIA/SC. He was also a member of the HBA of Northern California. Over the years, Ray held many leadership positions at CBIA, and he served on the boards of both the Building Industry Legal Defense Foundation and NAHB. Surely the home building industry has lost one of its greatest advocates and leaders in Ray Becker, and our hearts go out to his family and friends. Read more about Ray on the CBIA Web site.
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