| October 26, 2009 |
By Joe Robson
NAHB Chairman and
Jerry Howard
NAHB President and CEO |
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Housing isn't out of the woods just yet
despite mounting evidence that the economy is now on the road to recovery and that single-family home sales and production have bottomed out, said economists at NAHB's Fall Construction Forecast Conference this week.
 This well-attended event, which included both in-person participants and those connecting to the conference via Web connections, attracted significant media attention. Leading off the day, NAHB Chief Economist David Crowe reported that "This will not be the kind of robust recovery you usually see given the depths we are coming out of," and said that a big negative for the economy right now is the continuing wave of joblessness. "Not adding to jobs feeds back into dampening housing demand," he said. So while new home sales bottomed out at a seasonally adjusted annual rate of 329,000 units in January and climbed back 30% by August, to 429,000, David's forecast is for a total of just 389,000 sales this year, followed by a rise to 525,000 sales in 2010 and 806,000 in 2011. One problem is that there are currently about two million vacant homes for sale, which is approximately one million more than needed; additional foreclosures are partly to blame along with high unemployment.
David also discussed the recent decline in the average size of new homes, which has gone from just over 2,300 square feet in 2007 to below 2,100 square feet currently. "That's not unusual in a recession," he said, "as first-time buyers account for a larger share of the market." Throughout the day, every expert panelist who appeared was in agreement on at least one thing – that failure to extend the home buyer tax credit, which is set to expire at the end of November, would be a setback for the first-time home buyer market that was driving sales this summer. For comprehensive coverage of the Construction Forecast Conference, look to in the Oct. 26 evening edition of Nation's Building News Online.
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Tell Congress: Housing = Jobs!
 With time running out on the $8,000 home buyer tax credit, NAHB is urging all of our members to write Congress at www.capitolconnect.com/builderlink or call 1-866-924-6242 and tell your federal representatives to extend and expand this important incentive. Our message hinges on the point that such action would create hundreds of thousands of desperately needed jobs and help put housing and the economy back on solid ground. Specifically, NAHB estimates that in the first year, an extended and expanded tax credit would create more than 350,000 jobs, increase home purchases by 383,000, boost housing starts by 82,000, generate $16.1 billion in wages and salaries and $12.1 billion in business income, and yield tax revenues of $8.4 billion for the federal government and $3.2 billion for state and local governments. View a one-page analysis of NAHB's tax credit proposal online, and check out the full-page ad that NAHB ran in this Wednesday's Wall Street Journal and USA Today, at right.
Please note: When you contact your senators and congressmen, be sure to let NAHB know about any and all feedback you may receive, so we can follow up on your efforts. Just fill out our online Congressional feedback form, send us an e-mail at builderlink@nahb.com, or call us at (800) 368-5242, x8475. Thanks ahead of time for everyone's participation and assistance!
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Testifying before the Senate Banking Committee on Oct. 20,
 NAHB Chief Economist Dr. David Crowe warned that builders are reporting that business generated by entry-level buyers is already declining because it is now too late to complete a new home sale in time to take advantage of the $8,000 first-time home buyer tax credit. On behalf of NAHB, David urged Congress to extend and expand the credit, which is set to expire at the end of next month. "Not only will builders soon be losing one of their most effective selling tools, they are also facing significant challenges that threaten to derail the fragile housing recovery before it even has time to take root," he said. "Strict mortgage underwriting and low appraisals are making it difficult for a willing buyer to complete the sale, and terms and credit availability for builder acquisition, development and construction (AD&C) loans are extremely tight." The bottom line is that housing and the economy are at a critical crossroads, he explained. He said that to spur job growth, help reduce foreclosures and excess housing inventories, and stabilize home values, Congress should extend the home buyer tax credit for an additional year through Nov. 30, 2010 and make it available to all purchasers of a primary residence. In addition, he said, Congress can also help put the housing market back to work by encouraging regulators and the banking industry to restore lending for viable home building projects and to take meaningful steps to avoid unnecessary foreclosures on outstanding AD&C loans by accommodating loan modifications and workouts. Read more about David's testimony in our press release, or contact MondayMorningQuestions@nahb.com for more information.
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A new initiative to boost affordable mortgage finance
 was announced by the Obama Administration on Oct. 19. The plan involves state and local housing finance agencies (HFAs) and is intended to help support low mortgage rates and expand resources for low- and middle-income households to purchase or rent affordable homes. The initiative has two parts: a new bond purchase program that will be run through Fannie Mae and Freddie Mac to fund home loans and finance rental production at affordable rates; and a temporary credit and liquidity program to improve HFAs' access to liquidity for outstanding HFA bonds. This program could reinvigorate state HFA mortgage loan programs that have been less active for the past two years because the HFAs have been virtually frozen out of the housing bond market.
The latest news comes after many discussions with the Treasury Department on the need to resuscitate HFA funding; in fact, NAHB sent a letter supporting such assistance earlier this year and has been monitoring developments in coordination with the National Council of State Housing Agencies. According to the new program, Treasury will now be purchasing Fannie Mae and Freddie Mac securities backed by the new mortgage revenue bonds. This program can support several hundred thousand new mortgages to first-time home buyers in the coming year, as well as refinancing opportunities to put at-risk but responsible and performing borrowers into more sustainable mortgages. In addition, the new bond issuance will support the development of tens of thousands of new rental housing units for working families. See the latest edition of NBN Online or more information, or send inquiries to MondayMorningQuestions@nahb.com.
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Thousands of potential code changes are on the table
 as the International Code Council holds its 2009-10 Code Development Hearings and Annual Conference from Oct. 24 through Nov. 11. The hearings are the first step toward development of the 2012 ICC family of model building codes, including the International Residential Code and International Energy Conservation Code. The 2012 editions are expected to be available for adoption in mid-2011. Out of 2,400 potential code changes that are under consideration, many could have a significant impact on home building practices without providing any corresponding cost-effective benefits – which is precisely why members of the NAHB Construction, Codes and Standards Committee's Provisions Oversight Groups (POGs) met in Washington two months ago to develop our association's positions in preparation for this week's conference. As a result, NAHB is taking a position in support or opposition to about 1,100 of the code change proposals that have been submitted. NAHB also submitted certain proposals, including our EC 16 proposal that POG members have determined is the most comprehensive, affordable and flexible way to achieve a 30% increase in energy efficiency. This efficiency goal is supported by NAHB policy and has been cited by members of Congress as a key step toward combating global warming. Read about some of the other positions that NAHB has developed on various code proposals in the latest edition of NBN Online, and you'll have a true appreciation for the hard work that our member and staff codes experts have been doing behind the scenes on your behalf! Send questions to: MondayMorningQuestions@nahb.com.
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Builder confidence slipped back a notch in October
 as the expiration of the $8,000 home buyer tax credit neared, according to the latest reading of the NAHB/Wells Fargo Housing Market Index (HMI) on Oct. 19. After trending upward from an historic low in January, the HMI's positive momentum stalled for a one-point decline to 18 this month. This was also the first time since November of 2008 that all three component indexes of the HMI simultaneously declined. While the component gauging current sales conditions fell a single point to 17, the component gauging sales expectations in the next six months slid two points to 27 and the component gauging traffic of prospective buyers fell three points to 14. NAHB pointed to the HMI results as the latest evidence that the expiring tax credit needs to be expanded to all buyers and extended for another full year. Read our HMI press release for details, or see the HMI tables for yourself online. Contact: MondayMorningQuestions@nahb.com.
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The latest housing production numbers
from the federal government, released Oct. 20, show that single-family housing starts regained some ground in September but that overall construction activity remains subdued across the housing sector. While total (single- and multifamily) housing starts edged up half a percent to a seasonally adjusted annual rate of 590,000 units, issuance of total building permits – an indicator of future construction activity – fell by 1.2% to a seasonally adjusted 573,000 units. In NAHB's press release reacting to the numbers, Chairman Joe Robson used this opportunity to once again call for Congress to keep the recovery moving forward and create much-needed jobs across the country by acting now to expand and extend the home buyer tax credit. Single-family starts rose nearly 4% in September to a 501,000-unit rate while multifamily starts fell 15.2% to a meager 89,000-unit rate. Single-family permits fell 3% to 450,000 units and multifamily permits gained 5.1% to 123,000 units. Read our press release or see the government's complete report online. Send questions to MondayMorningQuestions@nahb.com.
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NAHB is now on LinkedIn,
where you can connect with other NAHB members and staff. The National Association of Home Builders is the official NAHB group on LinkedIn. By joining the group, you can monitor NAHB’s Twitter and news release feed, create and participate in discussions about home building and NAHB, and help grow NAHB’s online community. The group’s primary goals are to foster networking and information sharing, which adds value to your NAHB membership and enhances our online communications. The LinkedIn group is just part of NAHB’s new social media initiative, which puts strategic emphasis on building an active presence in online communities like LinkedIn, Twitter and Facebook. You can connect with all NAHB social media properties via http://nahb.org/socialnetworks. Send questions to MondayMorningQuestions@nahb.com.
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Apply now for the NAHB Safety Award for Excellence (SAFE),
 an award that honors the achievements of builders and trade contractors who have developed and implemented high-quality construction safety programs. Other eligible candidates include government officials and NAHB-affiliated associations who have made successful efforts to advance safety in the home building industry. Last year, 13 companies were cited for their safety achievements; this year could be your company's chance. Applications are due by November 9, so don't delay. Get eligibility information and an online application here. Award winners will be recognized during a banquet ceremony at the 2010 International Builders’ Show in Las Vegas.
NAHB is also seeking companies to become sponsors for this safety awards program. For sponsorship information, click here or contact Andy Flank at 800-368-5242, x8059. Send other questions to: MondayMorningQuestions@nahb.com.
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