Echoing a similar theme, Fed Chairman Bernanke said in a speech before the Economic Club of New York that U.S. economic performance so far this year has been “reasonably good” despite a notable contraction in the housing sector that began in the second half of 2005. Since the last meeting of the Federal Open Market Committee in September, when the Fed announced it was cutting short-term interest rates by one-half of a percentage point, the housing market has weakened further, said Bernanke. “The further contraction in housing is likely to be a significant drag on growth in the current quarter and through early next year,” he said. “However, it remains too early to assess the extent to which household and business spending will be affected by the weakness in housing and the tightening in credit conditions.”

The Fed this week also released results from its "Beige Book," a snapshot of conditions in the Fed's 12 district banks throughout the country, that show the economy expanding in all areas, albeit at a slower pace since August. The Fed described growth as "moderate," "modest," and "mixed" around the country and executives interviewed in a number of industries "indicated a higher-than-usual degree of uncertainty about the outlook for economic activity."

In related economic developments, the Commerce Department reported that housing starts nationwide last month dropped 10.2 percent to a seasonally adjusted annual rate of 1.191 million units -- the lowest level since March 1993. In a press release commenting on the report, NAHB noted that "builders are pulling back on production until sales improve."

NAHB this week also released its Housing Market Index for October, which shows that builder confidence is continuing to fall, and is now at its lowest point since the series began in January of 1985. For more information, click here.

See the Oct. 22 issue of Nation's Building News for more on the Treasury secretary's and Fed chairman's remarks, or view the full statements of  Paulson and Bernanke. To learn more about the housing economic outlook, be sure to attend the NAHB Construction Forecast Conference on Oct. 24 at the National Housing Center.

Under current law, building codes must be approved and adopted at the state and local level. Thompson urged lawmakers to remove a provision in energy bill H.R. 3221 that would create a new code-writing role for the Department of Energy for states that fail to achieve significant above-code benchmarks. “Because the structural and efficiency needs vary greatly for homes built in Florida or New York, versus homes built in Oregon or New Mexico, for example, it is crucial that the code process remains open, is based entirely upon consensus and is protected from overarching encroachment by any federal agency,” he said. “Establishing mandatory benchmarks and rigorous federal oversight for state building codes would  subvert the consensus-code development process, violate states’ rights and impose unwanted and exorbitant costs on home buyers.”

Thompson also called on Congress to extend and expand federal tax credits that passed as part of the Energy Policy Act of 2005. For more on the hearing, see NAHB's press release or contact Elizabeth Odina at 1-800-368-5242, x8570. [return to top]