| February 22, 2010 |
Bob Jones
NAHB Chairman and
Jerry Howard
NAHB Chief Executive Officer |
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Builders are starting to see the expected effects
of excellent home buying conditions on consumer demand, according to the latest reading of the NAHB/Wells Fargo Housing Market Index (HMI), released Feb. 16.
 The HMI, which is NAHB's monthly gauge of home builder confidence, rose two points to 17 in February as continued low interest rates, stabilizing home values, the availability of first-time and repeat-buyer tax credits and evidence of some healing in the job market all provided a bit of encouragement to our members in recent weeks. While still low by historic standards, the HMI showed improvement in two out of three of its component indexes this time around. The component gauging current sales conditions rose two points to 17, while the component gauging sales expectations in the next six months rose a single point to 27. Meanwhile, the component gauging traffic of prospective buyers remained flat, at 12. Regionally, the HMI's results were mixed, with the Midwest and South each posting two-point gains and the Northeast and West posting one-point declines. Read more in our press release or see the HMI tables for yourself right here. Contact: MondayMorningQuestions@nahb.org.
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Housing starts hit a six-month high in January
 as the positive impacts of home buyer tax credits and other favorable buying conditions started to take effect, according to the latest figures from the U.S. Commerce Department, released on Feb. 17. Overall starts rose 2.8% to a seasonally adjusted annual rate of 591,000 units, with gains registered on both the single- and multifamily sides. Single-family starts rose 1.5% to 484,000 units while multifamily starts gained 9.2% to 107,000 units. Meanwhile, overall permit issuance, which can be an indicator of future building activity, fell a disappointing 4.9% to 621,000 units for the month. However, this was due entirely to a 23% decline to 114,000 units on the multifamily side, where an even bigger gain was registered in the previous month. Single-family permits remained virtually unchanged, with a 0.4% gain to 507,000 units. Read our press release or the government's report for more.
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President Obama's $3.8 trillion fiscal 2011 budget proposal
 aims to create jobs in the near term through additional stimulus spending and reduce the deficit in the long term by imposing nearly $1 trillion in higher taxes and fees over the next decade on households earning more than $250,000. To spur job growth, Obama is seeking $100 billion in additional tax cuts and public works spending right away that includes a $33 billion tax cut in a new jobs bill that would give firms a $5,000 tax credit for each new worker they hire this year. Businesses that increase wages or hours for their current workers in 2010 would be reimbursed for the extra Social Security payroll taxes they would pay. The tax credit would not apply to those who earn more than $106,800. Obama also proposes to eliminate capital gains taxes on new investments for small businesses and extend through 2010 a provision that allows small businesses to write off in the first year up to $250,000 in equipment investments.
Rebates for Retrofits
Obama has also proposed to include a rebate for those who retrofit their homes, a plan that is gaining traction on Capitol Hill. NAHB recently sent a letter to Senate leaders urging them to support the comprehensive home energy retrofit program being developed as part of pending job creation legislation. The letter stated that this program has the potential to “create thousands of jobs for home builders, remodelers and contractors” and will improve energy efficiency in the existing housing stock. NAHB also emphasized the importance of enacting a program that includes all qualified, properly-trained contractors who have access to diverse training and certification options, such as those offered by the Home Builders Institute.
Concerning Elements
Of concern to the housing community, part of the White House plan to produce a decade-long reduction in the deficit from $1.6 trillion this year would be to limit the mortgage interest deduction, real estate tax deductions and all other itemized deductions for couples making over $250,000 and single taxpayers earning more than $200,000. Those in the highest tax brackets would be able to deduct 28% of such expenses, instead of a percentage equal to their top marginal tax rate. The plan also seeks to tax carried interest as ordinary income, which could significantly impact the multifamily and commercial real estate sectors at a time when they are already experiencing a severe downswing. That said, it’s important to note that no White House budget is ever approved “as is” by the Congress. In fact, the proposals to limit the itemized tax deductions for high earners and raise the tax rate on carried interest were included in the President’s budget from last year and received a chilly reception on Capitol Hill. NAHB will work to ensure that they are once again stripped from a final budget plan to emerge from Congress. Meanwhile, NAHB staff continues to analyze the massive 1,000-plus page budget proposal and will present a more detailed analysis shortly.
What's Next
Obama is expected to send Congress a complete budget plan in April, and Congress is not anticipated to approve the fiscal year 2011 budget until later in the year. NAHB will remain deeply engaged as the budget process moves forward, fighting to strip out any provisions that will harm housing and promoting elements that will help small businesses and the housing sector. In the meantime, you can send your questions to MondayMorningQuestions@nahb.org.
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Housing affordability remains near record highs
according to the latest NAHB/Wells Fargo Housing Opportunity Index (HOI), released on Feb. 17. The HOI revealed that 70.8% of all new and existing homes that were sold in the final three months of last year were affordable to families earning the national median income of $64,000. This was up slightly from the third quarter of 2009 and very near the record-high of 72.5% of homes that were affordable to median-income earners in early 2009. Favorable mortgage rates and sliding house prices that have now begun to stabilize were the outstanding factors in the latest HOI. Meanwhile, in terms of specific metro areas, Indianapolis held on to its crown as the most affordable major housing market in the country according to the new numbers. There, more than 95% of homes that were sold during the final quarter of last year were affordable to the area's median-income households. Other top-of-the-list metros for housing affordability included Detroit-Livonia-Dearborn, Mich.; Dayton, Ohio; Youngstown-Warren-Boardman, Ohio-Pa.; and Akron, Ohio. Read more in our press release, or view the HOI tables here. Contact: MondayMorningQuestions@nahb.org.
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Helping Haiti's children in the name of one of our own
 is the mission of a very special memorial fund that has been set up following the tragic death of home builder Len Gengel's 19-year-old daughter, Britney. A Massachusetts native and sophomore at Florida's Lynn University, Britney had just arrived in Haiti on a relief mission with a group of students and faculty when the devastating earthquake hit, reducing to rubble the Hotel Montana in Port Au Prince, where her group was staying. Adding to the excruciating ordeal that Britney's family has suffered, erroneous reports initially indicated that she had been rescued safe and sound. Sadly, this was not the case. Now, in the hope that Britney's efforts to help Haiti's children will continue as she would have wanted, a non-profit charitable organization has been established in her honor – Britney Gengel's Poorest of the Poor Fund.
Britney's father, Len, is owner of C&S Builders in Rutland, Mass., and has previously served as President of both the Builders Association of Central Massachusetts and the Massachusetts (state) Home Builders Association. Amidst an outpouring of community support for Len and his wife, Cherylann, friends and colleagues at those HBAs are doing their utmost to promote this worthy cause, and they and the NAHB leadership team would like to encourage all of our members to consider making a contribution. To donate, you can visit www.BritneyGengelsPoorestofthePoorFund.com, or send a check made payable to Britney Gengel's Poorest of the Poor Fund, P.O. Box 355, Rutland, MA 01543. For more information and to sign a book of condolences, please type "Britney Gengel" in the searchbox at www.legacy.com. Contact: Linda Donato, HBAM Executive Officer, 508-543-6119.
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