NAHB News
April Downswing in Single-Family Market
The downswing in the single-family housing market deepened in April while a bump up for the month in the extremely volatile multifamily market lifted total housing starts 8.2 percent to a seasonally adjusted annual rate of 1.032 million units, according to figures released by the Commerce Department in mid-May. Total starts were down 30.6 percent from a year earlier.
Single-family housing starts dropped 1.7 percent for the month of April to a seasonally adjusted annual rate of 692,000 units, the lowest monthly production rate since January 1991 and 42.2 percent below April 2007.
"It's no surprise that the single-family housing market continues to deteriorate since our surveys of builder confidence and market expectations have been hovering in a historically low range for the past nine months," says NAHB President Sandy Dunn. "Congress and the Administration must act now to kick-start housing and lift the overall economy."
"The demand for new homes still is quite weak, the overhang of vacant housing units on the market is at record proportions, consumer sentiment continues to fall and the economy has been losing jobs since the end of last year," says NAHB Chief Economist David Seiders. "The fundamentals point to further deterioration of single-family housing production over the balance of this year, and the condo component of the multifamily sector also is destined to lose more ground."
Multifamily housing starts rose 36.0 percent to a seasonally adjusted annual rate of 340,000 units in April after dropping 35.1 percent to a 250,000-unit pace the month before. The pace of multifamily construction was 17.6 percent above April 2007.
Total building permits rose 4.9 percent in April to a seasonally adjusted annual pace of 978,000 units. Total permits were down 34.3 percent from a year earlier.
Single-family permit issuance rose 4.0 percent to a pace of 646,000 units for the month. The pace was marginally lower than the first quarter average of 647,000 this year and 40.1 percent below April 2007.
The rate of multifamily permit issuance was up 6.8 percent to 332,000 units for the month. The pace was 19.2 percent below a year earlier.
Regionally, starts of new homes and apartments were up in the Midwest, South and West by 24.4 percent, 3.6 percent and 18.5 percent, respectively. Housing starts were down in the Northeast by 12.7 percent. All four regions reported a pace of construction substantially lower than a year earlier.
Record Attendance at National Green Building Conference
Over 1,500 homebuilders and other housing professionals will convene in New Orleans May 10 to 13 at the Sheraton New Orleans Hotel to discuss the latest advancements and trends in eco friendly home building at the 10th annual National Association of Home Builders National (NAHB) Green Building Conference. Hosted by NAHB, it is the only national conference targeted to green building for the mainstream residential single-and multifamily building and remodeling industry.
Conference attendees will have the opportunity to attend cutting-edge education sessions, tour an impressive exhibit hall showcasing the latest green building products and ideas and attend the National Green Building Awards. Over 60 education sessions will be offered on topics ranging from green remodeling and green building trends to building science, indoor air quality and local green building considerations. Building professionals will also learn about the new ANSI National Green Building Standard and the NAHB National Green Building Program, and will be able to work towards earning the new Certified Green Professional Designation.
"Green building is the present and the future of the building industry and this conference really demonstrates how far we have come," says Ray Tonjes, Green Building Subcommittee chairman and a custom home builder in Austin, Texas. "With the event's excellent education sessions, speakers and green exhibits, home tours and networking opportunities, the insights and ideas builders will come away with are unmatched."
Highlights of this year's show include a tour of green built and remodeled homes in the New Orleans area. The tour offers a look at some of the latest green products and building techniques in addition to a unique opportunity to learn about the ongoing rebuilding efforts in the area and the challenges faced by local builders. Throughout the week, attendees will also hear from notable speakers including Michael Todman, president of Whirlpool North America, Dane Parker, Dell Global's environmental director and Patrick Moore, Ph.D., a nationally regarded proponent of green consensus-building and former president of Greenpeace International.
Howard Says Move to Ease Mortgage Credit Crunch Not Bold Enough
With the nation's housing industry caught in the grips of a difficult mortgage credit crunch as the peak home building season fast approaches, regulators in Washington, D.C., took an encouraging step in April to put Fannie Mae and Freddie Mac to work to stabilize housing and the financial markets. But considering the severity of the problem and its dire implications for the U.S. economy, homebuilders said that it is not enough.
The Office of Federal Housing Enterprise Oversight (OFHEO) announced on March 19 that it was reducing the capital surcharge levied on the two housing government sponsored enterprises (GSEs) to increase immediate liquidity to the mortgage-backed securities market by up to $200 billion.
OFHEO estimated that Fannie Mae and Freddie Mac would now be allowed to purchase or guarantee about $2 trillion in mortgages this year. "This capacity will permit them to do more in the jumbo temporary conforming market, subprime refinancing and loan modifications areas," OFHEO says.
OFHEO was reducing the 30 percent capital surplus required of the GSEs to 20 percent so that they could invest the difference in mortgages and mortgage-backed securities. Based on reports in the news media, NAHB and others had expected to see a greater cut in the capital requirement, although OFHEO did say in its announcement that it would consider further reductions in the future.
"While we appreciate this action, it falls short of providing the liquidity required to stabilize today's credit-squeezed mortgage market," says Jerry Howard, NAHB's executive vice president and CEO. "We were expecting a much bolder step by OFHEO, with a greater reduction in the capital surcharge in light of the severity of the mortgage credit crunch."
To get the most mileage out of these additional funds, he says, "Fannie Mae and Freddie Mac must target borrowers who have been shut out of the mortgage market by the financial sector meltdown. This action is a partial step to getting Fannie Mae and Freddie Mac back on the road to meeting their housing mission. Developing a proper balance between their housing mission and the interest of their stockholders is a key provision of the pending GSE regulatory reform legislation, which further underscores the urgent need for quick Senate action on the bill."
Builder Confidence Remains Unchanged
Builder confidence in the market for new single-family homes remained unchanged for a third consecutive month in April, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI held at 20, up marginally from the record low of 18 set in December of 2007 (the series began in January of 1985).
"With the traditional home buying season now well underway, we have not seen the bump in sales activity that we normally would this time of year," says Sandy Dunn, NAHB president. "At this point, all eyes are on Congress and its efforts to craft meaningful legislation to help support the housing market and stabilize our nation's economy before it heads deeper into recession."
"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. That's where Congress can make a big difference," says NAHB Chief Economist David Seiders.
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
The HMI's component index gauging current sales conditions declined two points to 18 in April, its lowest level since November of last year. The component gauging traffic of prospective buyers held even at 19 for a third consecutive month, up from a low of 13 last December. The component gauging sales expectations for the next six months rose four points to 30, although this measure was down substantially from a year earlier.
National Housing Endowment Awards HELP Grants
Four institutions of higher education were awarded grants of $100,000 from the National Housing Endowment, the philanthropic arm of the National Association of Home Builders (NAHB). The Homebuilding Education Leadership Program (HELP) grant is given to two- and four-year colleges and universities to help create, expand or enhance existing residential construction management programs.
In 2006, the National Housing Endowment launched the HELP program as the cornerstone of its education effort and its signature grant program. Through this program, the Endowment has made a long-term commitment to establish closer relationships with institutions of higher education. Key goals of the HELP program include encouraging academic institutions to provide residential education tracks and/or programs that respond to the current issues of the home building industry and increasing the number of qualified college graduates entering the residential construction profession.
The Endowment's board of trustees selected four schools who will each receive HELP grant funding over the next two years: California Polytechnic University in San Luis Obispo, Calif., Jefferson State Community College in Birmingham, Ala., John A. Logan College in Carterville, Ill., and Middle Tennessee State University in Murfreesboro, Tenn.
Builders Support Mortgage Relief Proposal
The Federal Housing Finance Board will allow the Federal Home Loan Banks to temporarily increase their holdings of Fannie Mae and Freddie Mac securities to help stabilize the mortgage finance market.
"This prudent action to allow the Federal Home Loan Banks to double their holdings of agency mortgage-backed securities (MBS) for a two-year period will help to alleviate the mortgage credit crunch by potentially injecting over $100 billion into the MBS market," says Jerry Howard, executive vice president and CEO of NAHB.
To get mortgage money flowing again given the current chaos and stagnation in the credit markets, Howard also urged Congress to move quickly to enact FHA modernization and comprehensive reform of Fannie Mae and Freddie Mac.
"A revitalized FHA will be well positioned to provide reasonably priced, low downpayment mortgage solutions to millions of home owners and potential home buyers," says Howard. "Full GSE reform for Fannie Mae and Freddie Mac will enable these financial institutions to greatly relieve liquidity and inventory pressures in the mortgage credit markets."
Builders Laud House Passage of Housing Bill
The National Association of Home Builders (NAHB) applauded House passage of H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act, on March 8. The bill would help struggling borrowers and boost the ailing housing market and faltering economy.
"[In late April], more than 1,200 homebuilders delivered an urgent message to Congress to enact legislation to jump-start housing, save jobs and restore confidence. H.R. 3221 would help achieve these aims," says NAHB President Sandy Dunn, a homebuilder from Point Pleasant, W.Va. "With the economy on the edge of a deep recession, we urge House and Senate negotiators to move swiftly to reconcile their differences and craft a final bill that the President can sign into law in order to bring much-needed relief to the American people."
The House bill would create a first-time home buyer tax credit up to $7,500 for the purchase of any home for those who earn less than $70,000 annually and phases out at $140,000 for married couples. The credit would become available when the bill is enacted into law and would expire in April 2009. Home buyers would be required to repay the credit to the government, without interest, over 15 years.
"The tax credit is the most effective way to halt the downward spiral in the housing market and stabilize home prices and financial markets," says Dunn. "This will get consumers off the fence, stimulate home buying and reduce excess supply in housing markets."
