Builders Commend White House Focus on Helping Home Owners, Seek Additional Steps to Spur Housing

WASHINGTON, Jan. 25 - The National Association of Home Builders (NAHB) commends President Obama for offering proposals in last night's State of the Union address to help families stay in their homes and stanch foreclosures, and is urging policymakers to take additional actions to mend the housing market and boost the economy.

"President Obama's refinancing plan offers an opportunity for continued exploration of ways to aid struggling home owners and tackle the foreclosure crisis," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "We look forward to working with the White House and Congress to tackle this issue and continue to make progress on foreclosures that are hampering the housing market."

In order to create jobs and further stabilize housing and the economy, Nielsen added that the Administration, Congress and federal regulators need to reopen the lines of credit for builders ready to embark upon viable projects in markets where new housing stock is needed and to ease overly restrictive mortgage lending requirements for qualified home buyers.

The NAHB/First American Improving Markets Index shows that scores of metro areas across the nation are beginning to see signs of recovery, but in order to meet this emerging housing demand, builders need access to credit to break ground on sound projects and generate new jobs and sorely needed tax revenues in these communities.

"President Obama was absolutely right when he said that 'there has never been a better time to build,' and the nation's home builders are eager to do their part to contribute to economic growth and job creation," said Nielsen, who noted that housing normally accounts for more than 17 percent of the nation's gross domestic product.

Building 100 single-family homes creates more than 300 full-time jobs and $8.9 million in federal, state and local tax revenues that help fund local schools, police and firefighters in markets across the land.

Sixty percent of voters say that resolving the foreclosure mess is essential to get the economy back on track and there is broad support for government policies that encourage homeownership, according to a new nationwide survey on housing commissioned by NAHB from the Republican and Democratic polling firms of Public Opinion Strategies and Lake Research Partners.

More than seven in 10 voters representing all political parties believe that tax incentives to promote homeownership are reasonable and appropriate and nearly six in 10 voters say the federal government should make it a high priority to restore the nation's housing market.

Even more telling, the majority of voters believe neither party is doing a good job on housing.

"In this election year, voters will be looking closely at President Obama, the GOP presidential contenders and congressional candidates from both political parties to determine how they plan to put housing and the economy back on track," said Nielsen. "How the candidates respond will decide not only their political fate but the economic prospects of most Americans."

Builder Confidence Rises Fourth Consecutive Time in January

WASHINGTON, Jan. 18 - Builder confidence in the market for newly built, single-family homes continued to climb for a fourth consecutive month in January, rising four points to 25 on the NAHB/Wells Fargo Housing Market Index (HMI), released today. This is the highest level the index has attained since June of 2007.

"Builder confidence has now risen four months in a row, with the latest uptick being universally represented across every index component and region," noted Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "This good news comes on the heels of several months of gains in single-family housing starts and sales, and is yet another indication of the gradual but steady improvement that is beginning to take hold in an increasing number of housing markets nationwide -- and that has been shown by our Improving Markets Index. Policymakers must now take every precaution to avoid derailing this nascent recovery."

"Builders are seeing greater interest among potential buyers as employment and consumer confidence slowly improve in a growing number of markets, and this has helped to move the confidence gauge up from near-historic lows in the first half of 2011," noted NAHB Chief Economist David Crowe. "That said, caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market."

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index 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 "high to very high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Each of the HMI's three component indexes registered a fourth consecutive month of improvement in January. The component gauging current sales conditions rose three points to 25, which was its highest point since June of 2007. The component gauging sales expectations in the next six months also rose three points, to 29 -- its highest point since September 2009. And the component gauging traffic of prospective buyers rose three points to 21, its highest point since June of 2007.

The HMI also posted gains in all four regions in January, including a nine-point gain to 23 in the Northeast, a one-point gain to 24 in the Midwest, a two-point gain to 27 in the South and a five-point gain to 21 in the West.

Editor's Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at www.nahb.org/hmi. More information on housing statistics is also available at http://www.housingeconomics.com.

Persistent Tight Lending Conditions for Home Builders Threaten Economic Recovery

WASHINGTON, Dec. 6 -- The commercial banks on which home builders and developers largely rely to finance their projects continued in this year's third quarter to hold tight reins on acquisition, development and construction loans (AD&C), according to the most recent quarterly survey by NAHB's Economics and Housing Policy Group on the availability of credit to the housing industry.

"Restoring the flow of credit to housing is critical for the industry to rebound, provide jobs and boost the economy," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.

More than half of the single-family builders and developers surveyed by NAHB indicated they had decided to put any new construction or land activity on hold until the financing climate improves.

This has broad repercussions for housing and the economy. With inventories of new homes nearly depleted in many markets, builders should be gearing up to meet demand, create new jobs and keep the expansion moving forward. Unfortunately, production remains stymied because builders in these locations cannot get credit from lending institutions to begin work on new homes.

In normal times, housing accounts for more than 17 percent of the nation's gross domestic product. Constructing 100 new-homes generates more than 300 full-time jobs and $8.9 million in local, state and federal tax revenue that supports local schools and communities across the land.

"There can be no economic recovery without a housing recovery," said Nielsen. "While NAHB's Improving Market Index shows several housing markets around the nation are slowly starting to mend, a full-fledged revival will not take hold until we resolve the ongoing credit problems for home builders."

NAHB has been working to obtain a legislative solution on Capitol Hill.

On May 5, Reps. Gary Miller (R-Calif.) and Brad Miller (D-N.C.) introduced H.R. 1755, the Home Construction Lending Regulatory Improvement Act of 2011, to address specific regulatory impediments to the flow of credit needed by home builders. That measure currently has 80 cosponsors, and NAHB is seeking a companion bill in the Senate.

Of the minority of builders who sought AD&C loans in the third quarter, few saw improvement in the lending climate over the previous quarter and a significant share saw conditions continue to deteriorate.

Forty-eight percent of those polled said they had looked for financing for single-family construction in the third quarter.

Only 8 percent said the availability of financing for single-family projects was getting better (compared to the previous quarter), 61 percent said it was unchanged and 31 percent reported it had worsened.

Survey respondents who indicated that lenders were clamping down further on credit availability in the third quarter noted several ways in which the tightening was occurring:

· 77 percent said lenders were reducing the amount they were willing to lend.

· 75 percent reported seeing the allowable loan-to-value ratio being lowered.

· 66 percent found lenders who were not making any new real estate loans.

· 63 percent said they encountered lenders who were requiring personal guarantees or collateral not related to the project.

Lenders most often told builders they were tightening on loans because the regulators were forcing them to do so.

Sixty-eight percent of those surveyed said they were given this reason for restrictions on new AD&C loans and 52 percent heard it was the reason for tightening on outstanding loans.

NAHB URGES CONGRESS TO RESTORE HIGHER LOAN LIMITS

To help mend the struggling housing market, provide affordable mortgages for creditworthy home buyers and stabilize home values, which are all critical to creating jobs and helping the sputtering economy, Congress must act to reinstate the higher conforming loan limits that expired on Sept. 30.

The Senate has already approved a plan to reinstate and extend the higher loan limits for an additional two years. In light of the continuing weakness in the overall housing market, it is incumbent upon the House  to follow suit to ensure that millions of homes will still be eligible for Fannie Mae, Freddie Mac and FHA funding.

Last month, the national ceiling for mortgages securitized by Fannie Mae and Freddie Mac or insured by the FHA dropped from $729,750 to $625,500 and the formula for establishing area loan limits became more restrictive, producing decreases in more than 650 counties in 42 states in addition to those bound by the national ceiling.

This ripple effect means that millions of homes nationwide, including a substantial number in our local community, are now ineligible for Fannie Mae, Freddie Mac and FHA funding. In order to obtain a home loan, buyers will be subject to higher mortgages interest rates, fees and downpayments and more stringent credit standards.

Restoring the higher loan limits will provide home owners and home buyers with safe and affordable financing while providing a much-needed boost to housing markets all around the country.

If the House fails to act, the results could prove catastrophic for our local and national economy. The current drop in mortgage loan limits will reduce housing demand and place downward pressure on home prices in our local market and other areas across the nation. In turn, this will trigger more foreclosures, impede job creation and cause the fragile economy to backslide into recession.

The stakes could not be higher. At a time when stabilizing home values is vital to bolster household wealth, spur job growth and get the flagging economy moving forward, the House must act responsibly and reinstate the higher loan limits.