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national association of home builders

NAHB to Congress: Builders Lead the Way in Energy Efficient Housing

by on April 24, 2008

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WASHINGTON, April 24 - Calling green building “the next evolution in residential construction,” the National Association of Home Builders (NAHB) told Congress today that the best way to help small home builders promote residential energy efficiency and sustainability technology in home construction is by extending tax incentives for new energy-efficient homes.

Testifying before the House Small Business Committee, Michael Hodgson, president of the Stockton, Calif.-based energy consulting firm ConSol, said these incentives dovetail with the normal supply and demand for home construction. “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,” he said.

Under current law, builders who construct a home certified to achieve a 50 percent reduction in energy use are eligible to receive a $2,000 tax credit. 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.

“Unless Congress can end the political debate and extend this credit soon - with or without offsets - it will be a tremendous loss for my business and will eliminate the only federal incentive for efficiency in new homes,” said Hodgson.

He also urged Congress to increase the dollar amount of the credit, because achieving the 50 percent threshold required by statute is costly, especially for small builders.

Hodgson said that the housing industry is committed to the advancement of green building techniques that reduce energy consumption, improve indoor and outdoor air quality and conserve water and natural resources in both new and existing homes - all hallmarks of the NAHB National Green Building Program.

“NAHB members are leaders in the green building movement and were active on this effort long before the recent media interest in climate change and global warming,” he said. “In fact, NAHB will be hosting its 10th annual National Green Building Conference in New Orleans next month and has consistently been ahead of the curve in promoting and developing energy-efficient and environmentally friendly construction techniques for the mainstream home builder.”

NAHB and the International Code Council are awaiting final approval by the American National Standards Institute for the National Green Building Standard. The goal is to offer local jurisdictions an “off-the-shelf” green building program for all new homes and remodeling projects that is consensus-based and truly green, but flexible, said Hodgson.

“Green building means making intentional decisions that positively impact energy efficiency, resource conservation and indoor environmental quality throughout the entire design and construction process,” said Hodgson. “Green means doing the right thing for the builder, the home owner, and, most importantly, the environment.”

With the economy teetering on the edge of recession, Hodgson also called on Congress to move quickly to enact a housing stimulus package that will jump-start housing, save jobs and restore consumer confidence.

Specifically, NAHB urges Congress to include the following tax initiatives in the bill:

- A temporary home buyer tax credit. Hodgson noted that a provision in House bill H.R. 5720 could shore up home prices by stimulating sales and reducing excess inventory in housing markets.

- A net operating loss deduction carryback expansion. Allowing companies to carry back net operating losses beyond the current two years would help all hard-hit businesses — including financial institutions and manufacturers — to weather the economic storm, make their payrolls and emerge from this downturn in a position to grow.

- Expansion of the mortgage revenue bond program. This would help struggling home owners seeking to refinance their loans and would be especially useful for communities trying to avoid a wave of foreclosures or an extreme excess of inventory.

NAHB: Housing Starts Fall Further in March

by on April 22, 2008

WASHINGTON, April 16 - Builders continued to reduce the pace of new-home construction in March amidst ongoing erosion in the overall economy and credit markets, according to the latest figures released today by the U.S. Commerce Department. Total housing starts fell nearly 12 percent to a seasonally adjusted annual rate of 947,000 units for the month, while single-family starts fell 5.7 percent to a rate of 680,000 units.

“Builders are dramatically limiting starts of new homes in an environment of weak sales and heavy supply, ratcheting down production of single-family units to its slowest pace in 17 years,” noted NAHB President Sandy Dunn, a home builder from Point Pleasant, W.Va. “We’re doing everything in our power to bring the supply and demand equation back into balance and restore housing to its rightful place as an engine of economic growth. But now that we are in a genuine economic recession, there’s no question that more needs to be done at the federal level to support housing, shore up consumer confidence and limit the degree and duration of the economic contraction.”

“The Senate has done a fine job already in moving forward with beneficial legislation, and we applaud its efforts to this point,” added Dunn. “We urge the House to do the same thing and quickly advance a bill that can be reconciled with the Senate’s version and promptly sent to the President’s desk. Now is the time, during the spring home buying season, to implement measures that will have the greatest positive effect on housing and the economy.”

“Builders in the field continue to report that prospective buyers are visiting their model homes, but most are either unwilling or unable to go forward with a purchase given the downward trends in employment and home values as well as the tightening of mortgage credit conditions,” said NAHB Chief Economist David Seiders.

“It stands to reason that incentives such as a temporary home buyer tax credit and improvements to the housing finance system would help boost consumer confidence in the market and have a significant stimulative effect that could arrest housing’s heavy drag on economic growth. Such measures, combined with the Federal Reserve’s aggressive moves to lower interest rates and improve the functioning of financial markets, definitely would have substantial beneficial effects on the overall economy.”

The single-family side of the housing market continued to display persistent and sizeable declines in both new-home starts and permits for new construction in March, with starts down 5.7 percent to 680,000 units and permits down 6.2 percent to 606,000 units. Meanwhile, the multifamily side continued to display extreme month-to-month volatility in starts and permits, with 24.6 percent and 5 percent declines, respectively.

Regionally, housing starts were down across the board in March, with an 8.5 percent decline registered in the Northeast, a 21.4 percent decline in the Midwest, a 12.6 percent decline in the South and a 5.7 percent decline in the West. Permit issuance was mixed by region, with gains of 3.8 percent and 0.4 percent registered for the Northeast and South, respectively, and declines of 10.6 percent and 20 percent registered for the Midwest and West, respectively.

NAHB: Builder Confidence Remains Unchanged in April

by on April 22, 2008

WASHINGTON, April 15 - 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), released today. 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,” said Sandy Dunn, NAHB president and a home builder from Point Pleasant, W.Va.  “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,” noted NAHB Chief Economist David Seiders. “Measures that stimulate consumer confidence in the housing market, push the fence-sitters into the ring and put a floor under house prices can successfully halt the drag that housing is exerting on the national economy, and help stabilize financial markets at the same time. But such measures need to be implemented as soon as possible in order to limit the severity of the economic recession that now is underway.”

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.

Regionally, HMI results were mixed this month, with a one-point gain to 22 registered in the Northeast, a one-point decline to 15 registered in the Midwest, a two-point decline to 24 posted for the South and a two-point gain to 17 posted for the West.

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