Monday Morning Briefing Letter - 04/21/2008 (Plain Text Version)

By Sandy Dunn, NAHB President and
Jerry Howard, NAHB Executive VP and CEO

View Graphical Version | Subscribe to NAHB Publications | E-mail Our Editor
NAHB Home Page | Browse Other NAHB e-Newsletters |Search Back Issues

Adding fuel to the argument that a stimulus bill is urgently needed

to help buoy the economy and housing sector, NAHB Chief Economist David Seiders reported on April 15 that the economy has now entered a mild recession.

"The worse-than-anticipated housing downturn, combined with systematic weakening in the labor market and rapidly rising energy and food prices, has taken a heavy toll on American consumers," Seiders said. "It's now clear that we have entered what we anticipate will be a mild recession." Seiders also said he is adjusting his official housing forecast to indicate continuing downward movement in housing starts through the end of this year. Previously, he expected housing starts to bottom out in the third quarter, with a 27% decline registered for all of 2008. The total expected decline is now pegged at 30%. To guard against a longer and deeper downturn, Seiders said that Congress should take immediate steps to stimulate the economy through actions specifically targeted at improving the housing sector. In particular, he said, "Stopping the downward trend in housing prices is key to bolstering consumer confidence as well as mortgage credit quality, and a temporary home buyer tax credit is the best way to do that." Read Seiders's full statement to the media.

NAHB Member Benefit: NAHB will be running full-page ads this week in two influential Capitol Hill publications, drawing lawmakers' attention to the need for their immediate action. And on April 30, home builders will take this message directly to Congress as hundreds of NAHB members participate in Capitol Hill visits during our Spring Legislative Conference.

The mortgage credit crunch has spilled over into AD&C lending

for new residential construction, thereby increasing the many challenges faced by home builders in the current housing downturn, said Past NAHB President Bob Mitchell in testimony before the Senate Small Business Committee on April 16. Reporting on the topic of "The Impacts of the Credit Crunch on Small Firms," Bob told lawmakers that, while tighter mortgage lending terms have made it difficult for home buyers to obtain financing to purchase new homes, "Likewise, there have been dramatic adverse swings in the cost and availability of acquisition, land development and home construction (AD&C) loans for home builders." He noted that the current situation "vividly illustrates the importance of developing additional sources of AD&C credit." He pointed out that currently there is no secondary market for residential AD&C loans where community banks could turn to help manage their balance sheets and obtain liquidity for additional lending. Read more about what Bob told the committee here.

NAHB Member Benefit: A viable secondary market for AD&C loans would directly benefit builders and lenders by transferring risk away from lenders; increasing availability of funds so that projects could be more reliably completed; and mitigating the devastating impact of equity calls on builders, or transfers of partially completed projects to banks under capital and/or regulatory pressure. [return to top]

Builder confidence was unchanged in April

even as the traditional spring home buying season got underway. For a third consecutive month, the NAHB/Wells Fargo Housing Market Index (HMI) remained at 20, just two points above the record low of 18 set in December of 2007. While builders continue to report improvements in traffic through their model homes compared with late last year, this activity has not translated to actual sales. The HMI's component index gauging current sales conditions declined two points to 18 this month, while the component gauging traffic of prospective buyers held even at 19, and, perhaps surprisingly, the component gauging sales expectations in the next six months rose four points to 30 (although this was still down substantially from a year earlier). NAHB used the HMI and the next day's release of housing starts data for March (next item in this report) as further ammunition in our call for immediate congressional action on a housing stimulus bill. See NAHB's press release summarizing the HMI results and check out the actual HMI tables online. Contact Paul Lopez (x8409) for help in dealing with any media inquiries.

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. [return to top]

Builders continued to dial down the pace of housing starts

amidst ongoing erosion in the overall economy and credit markets in March. Overall starts fell by just shy of 12% in the month to a seasonally adjusted annual rate of 947,000 units, while single-family starts fell 5.7% to a rate of 680,000 units, said the latest Commerce Department data released on April 16. Permits for new single-family homes also fell by 6.2% in the month to 606,000 units. Meanwhile, the multifamily side continued to display its characteristic month-to-month volatility with a 24.6% decline in starts and a 5% decline in permits. Regionally, starts were down across the board, with an 8.5% decline registered in the Northeast, a 21.4% decline in the Midwest, a 12.6% decline in the South, and a 5.7% decline in the West. Permit issuance was mixed by region, with gains of 3.8% and 0.4% registered for the Northeast and South, respectively, and declines of 10.6% and 20% registered for the Midwest and West, respectively. See NAHB's press release on the government data and the Commerce Department's full report online. Contact Paul Lopez (x8409) for help dealing with media inquiries. [return to top]

Download your "Remodel Now" campaign materials today

and get a jump on preparations for National Home Remodeling Month! That's right, the NAHB Remodelers are launching their own version of our previously devised "Buy Now" campaign. This one-year effort will provide all kinds of newly developed resources – such as articles, press releases, ads and other tools – to local councils and HBAs for them to adapt to their own markets. Current "Remodel Now" campaign materials include a list of the top 10 reasons to remodel; customizable magazine and newspaper articles about the financial and lifestyle benefits of remodeling; great ads and promotional materials; a consumer brochure; a "how-to" kit for implementing the campaign; remodeling fact sheets and logos; and also Public Service Announcements. Visit the Remodeling Month Campaign Web site to download and customize these great materials, or read more about them in the latest edition of NBN Online. Contact Kelly Mack, x8451.

NAHB Member Benefit: All of the materials mentioned above are available free to NAHB remodelers and their local councils. They will be regularly updated for your use. [return to top]

See you at Spring Board and the Legislative Conference!

Due to ongoing preparations for these events, The Monday Morning Briefing will not be published on April 28 or May 5. We'll return with all the news from the Board of Directors meeting here in Washington in our next edition, dated May 12. Stay tuned! [return to top]