Monday Morning Briefing Letter - 05/12/2008 By Sandy Dunn, NAHB President and Jerry Howard, NAHB Executive VP and CEO

The American Housing Rescue and Foreclosure Prevention Act, passed by the House of Representatives with NAHB support on May 8, would help struggling borrowers and boost the ailing housing market and faltering economy. The bill would create a first-time home buyer tax credit of up to $7,500 for the purchase of any home for those who earn less than $70,000 annually, after which it phases out at $140,000 for married couples. This credit would become available when the bill is enacted into law and expire in April 2009, and home buyers would be required to repay it to the government, without interest, over 15 years. The bill would also modernize the FHA and provide comprehensive reform for the housing-related GSEs. In addition, the legislation would make significant enhancements to the Low Income Housing Tax Credit and tax-exempt housing bond programs, and would provide for a temporary increase in state mortgage revenue bond authority to help strapped borrowers seeking to refinance their home loans. Plus, it would allow the FHA to insure up to $300 billion worth of refinanced loans if lenders first reduce the outstanding principal to make them more affordable for borrowers.  At this point, the legislation must be reconciled with a narrower housing stimulus package that passed in the Senate last month, and it is unlikely that a final bill will include every provision that's within the House's latest version. NAHB is urging Congress to swiftly reconcile the differences in the proposed legislation and craft a final bill that the President can sign into law as soon as possible. Read NAHB's press release here.  Contact: Scott Meyer (x8144) and Greg Brown (x8421).

 A well-timed NAHB Legislative Conference on April 30 brought 1,200 builders to Washington to hold 300 meetings with members of Congress at the same time that thousands more builders lit up the switchboards on Capitol Hill with phone calls to their elected officials. Our members delivered an urgent message: Move quickly to avert an economic crisis and enact legislation to jump-start housing, save jobs and restore confidence. Washington policymakers also received the message via ads that ran in the National Journal, Roll Call, Politico, CQ Today and CongressDaily.  During the Legislative Conference, NAHB conducted a simultaneous Satellite Media Tour. This facilitated several builders appearing in Washington with their congressional representatives for interviews with the media from their home markets regarding local housing conditions and the need for Congress to move swiftly on a housing stimulus package. (Jerry Howard was also interviewed to provide the national perspective.) The interviews will air nationally and in 10 local media markets, including Reno, NV; Sacramento, CA; Waco, TX; Albuquerque, NM; Rochester, NY; Lexington, KY; Chattanooga, TN; Des Moines, IA; Orlando, FL; and northern Pennsylvania. In addition, CNBC interviewed Jerry and North Carolina builder Rick Judson on Capitol Hill. The focus was on NAHB’s Legislative Conference and congressional housing priorities, and that segment aired on CNBC’s Power Lunch. Contact Molly Murray (x8282) for information on the the Legislative Conference and Paul Lopez (x8409) for media-related inquiries.

Resolutions approved at the Spring Board meeting for adoption as official association policy are now available for viewing by those logged in as members on NAHB's Web site. They include:

The outlook for housing and the economy should gradually brighten within a few months, but before there can be any assurance that the worst of the downturn is over, there needs to be a pickup in home sales, according to panelists at NAHB’s Spring Construction Forecast Conference on April 24 in Washington, DC. NAHB Chief Economist David Seiders said that he continues to believe that new single-family home sales will stabilize during the middle of this year, paving the way for an upturn in late 2008 and in 2009 and leading to improvements in housing starts next year. However, “the sales side has to be off the deck before starts stabilize and move up,” he said. And so far, he reported, there are few signs that new single-family sales are close to bottoming out, with the Commerce Department just announcing an 8.5% decline in March, to a seasonally adjusted annual rate of 575,000 units, a 17-year low, and increasing the unsold inventory to an 11-month supply at the March sales pace. Through March, Seiders said, NAHB surveys of 30 large builders accounting for 25% of sales nationwide showed “no signs of stabilization, although the rate of the decline may be slowing.” Likewise, the NAHB/Wells Fargo Housing Market Index, which polls builders to gauge their opinion of current sales conditions and demand six months down the road, remains close to its record low recorded in December and shows no recovery yet, implying further deterioration of sales. “We need demand to revive to turn around the market,” Seiders said, and he suggested that a temporary tax credit for home buyers, an approach being considered in housing and economic stimulus legislation on Capitol Hill, could help provide the impetus to boost sales and end the downward spiral in home prices that is the biggest concern for the health of the nation’s economy. Read our complete coverage of the Construction Forecast Conference in NBN Online.

 NAHB applauded Fannie Mae's new Keys to Recovery Initiatives as well as its commitment to raise additional capital in support of those and other measures for responding to ongoing mortgage market challenges this week. A series of new programs designed to increase liquidity and stability in the mortgage and housing markets, the Keys to Recovery are a welcome development from the country's largest purchaser of home mortgages. In particular, Fannie Mae's decision to utilize the temporary increase in conforming loan limits to purchase jumbo-conforming mortgages under the same pricing structure accorded to portfolio purchases of regular conforming loans should help home buyers in high-priced markets. "The jumbo mortgage market is dysfunctional and in great need of active GSE involvement," noted NAHB EVP/CEO Jerry Howard in response to Fannie's announcement on May 8. "Fannie Mae's portfolio purchases will help narrow spreads from the recent record highs, making home purchases more affordable in high-priced metro markets." Read more about the other positive elements of Fannie Mae's Housing Recovery Initiative here. Contact: Dave Ledford, x8265.

The best way to help small home builders promote energy efficiency and sustainable technology in home construction is by extending tax incentives for new energy-efficient homes. That's exactly what energy consulting firm president Michael Hodgson told the House Small Business Committee while testifying on NAHB's behalf on April 24. Hodgson explained that "A tax credit program leaves important production decisions in the hands of builders, buyers and home owners and does not require expensive administrative oversight that is usually associated with a mandate." Under current law, builders who construt a home certified to achieve a 50% reduction in energy use are eligible to receive a $2,000 tax credit. However, that credit is set to expire at the end of this year, and – although pending legislation in the House and Senate would extend it – there is still no agreement between the two chambers over the appropriate budgetary offsets. Urging Congress to act soon to address this issue, Hodgson also told lawmakers that they should increase the dollar amount of the credit, because achieving the 50% threshold is costly, particularly for small builders. Read more in our press release online for more information.

A seventh rate cut by the Federal Reserve drew applause from NAHB on April 30 shortly after a closed-door meeting between members of the NAHB leadership and Fed officials. While details of the Fed meeting are confidential, we can tell you that NAHB representatives provided valuable information to Fed Chairman Ben Bernanke regarding the state of the nation's housing markets and ongoing challenges faced by home builders. When the Fed followed up with an expected rate cut of a quarter of a percentage point, NAHB lost no time responding with an urgent message that Congress now must do it's part to help resolve the housing crisis through a targeted stimulus package. Read our official statement online. [return to top]

NAHB's Quick Issues Index documenting the latest advances on our top Advocacy issues was updated for the Spring Board of Directors meeting and is now available to you online. Last week, NAHB First Vice President Joe Robson referred to the Quick Issues document as part of his report, and a copy was provided to every board member. This document is updated prior to every meeting of the NAHB Executive Board and is available for viewing by members only at www.nahb.org/issuesindex. Contact Samantha Ehrhart (x8450) for more info. [return to top]

Remodeling activity held firm in the first quarter according to the latest reading of NAHB's Remodeling Market Index (RMI). While the current market conditions indicator increased to 41.8 from 40.9 in the fourth quarter, the future expectations measure showed no change from the previous quarter, at 37.9. On a nationwide basis, the RMI component index gauging the amount of major additions and alterations in the first quarter increased by a little less than two points, while the index gauging minor additions and alterations slipped by less than a point to 41.57. Meanwhile, maintenance and repair work increased slightly in the first quarter, but the component gauging the amount of work committed for the next three months decreased by more than 3 points, to 29.6. Read our press release, see the RMI tables online, or contact Kelly Mack (x8451) for more. [return to top]

NAHB’s Technology Solutions Directory is an easy-to-use resource that enables builders, remodelers, contractors and other industry professionals to find information on software, IT solutions and services for their businesses. This is an online, 24-hour resource designed to help building professionals find software providers for everything from construction-based accounting and budgeting to Computer Aided Drafting and Design (CADD), as well as companies that provide such services as Web management, IT consulting, financial control and more. To search the directory, log on to the NAHB Web site and click on Online Directories under the Resources tab. This great new tool is free for your use, and NAHB members can post a standard listing for free. It is sponsored by the Business Management & Information Technology Committee. Contact: Agustin Cruz, x8472. [return to top]