NAHB Analysis Finds Big Economic Gains From Reviving Housing
Components of NAHB’s ongoing grassroots “Revive Housing, Restore America” legislative drive would play a critically important role in jumpstarting the nation’s slumbering economy, according to new research from NAHB’s Economics and Housing Policy Group.
While extending the first-time home buyer tax credit and expanding it to all income-eligible principal home buyers has garnered the bulk of attention in the news media, the analysis has identified several other desirable housing policies to restore the U.S. economy as well. These include correcting the appraisal process; improving residential acquisition, development and construction (AD&C) credit conditions; and expanding the tax code’s Net Operating Loss carryback period.
Among these proposals, reforming the appraisals process would boost home sales by increasing the flow of credit to home buyers and thereby stimulating housing demand. Recent NAHB survey data indicate that one-quarter of new home sales are being lost because the appraised value of the home is coming in below the actual contract price.
Economists at NAHB estimate that fixing this faulty process would increase home sales by nearly 100,000 during the first 12 months, resulting in the creation of more than 63,000 jobs (as measured on a full-time equivalent basis). These jobs would be in the construction sector, as well as other parts of the economy.
NAHB estimates that a new policy of encouraging lenders to provide leeway for residential AD&C borrowers who have loans in good standing would strengthen balance sheets for the nation’s home builders, thus saving thousands of businesses and creating more than 82,000 jobs in the residential construction sector.
Finally, a proposal to expand the tax code’s Net Operating Loss carryback period would help all businesses with losses by eliminating the current $15 million cap on average annual gross receipts and allowing 2009 losses to be eligible for the expanded carryback. In addition, the proposal would provide relief to taxpayers who have been hit by the Alternative Minimum Tax and allow them to fully benefit from any NOL carryback.
In an analysis published in Housing Economics Online, NAHB economists estimate that NOL tax relief would result in more than 53,000 jobs in the construction sector and more than 200,000 jobs throughout the rest of the economy.
Extending and enhancing the tax credit would spur 383,000 additional home sales — including 80,000 housing starts — and create nearly 350,000 jobs over the coming year, according to the NAHB analysis. For more on the impact of the tax credit proposal, click here to read a related story in this issue of Nation’s Building News.
For more information on the NAHB research, e-mail Paul Emrath at NAHB, or call him at 800-368-5242 x8449; or contact Rob Dietz, x8285.