Monday Morning Briefing Letter - 05/21/2007 (Plain Text Version)

By Brian Catalde, NAHB President and
Jerry Howard, NAHB Executive VP and CEO

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A behind-the-scenes deal on comprehensive immigration reform

was reached this week between Senate negotiators and the Bush Administration.

While the specific language of the bill is still a work in progress, it is expected to include provisions addressing border security, interior enforcement, employer verification and enforcement, the future flow of immigrants and a work authorization program for the 11-12 million illegal immigrants currently residing in the United States. The legislation will be considered by the full Senate starting on the evening of Monday, May 21. Although we won't know the outcome for sure until we review the actual language of the 800-page bill upon its release, NAHB continues to forcefully make our concerns known about several proposed employer provisions, including those pertaining to the liability of contractors for the legal status of their subcontractors' employees and other ID verification issues. Given all of the constituencies involved, a final compromise on immigration reform in the Senate could ultimately prove difficult to achieve. However, if a Senate bill is approved in the coming week, the House will take up the issue sometime in July. Stay tuned to this report and NBN Online for details. Contact Jenna Hamilton (x8407) for more information.

NAHB Member Benefit: As more than 20% of the construction industry labor force is foreign-born, congressional action on immigration reform is extremely important to our members. NAHB opposes illegal immigration and is working with our coalition partners to support comprehensive immigration reform and the creation of guest worker programs that will provide a more efficient system for dealing with those who come to the United States to work. As an industry, home building must be able to recruit foreign-born workers in order to have an adequate supply of labor for building the nearly 18 million new homes that will need to be constructed over the next decade.

A key pro-housing amendment in GSE reform legislation

was approved as the House of Representatives began debate on H.R. 1427, the Federal Housing Finance Reform Act, on May 17. The amendment, which was offered by Reps. Melissa Bean (D-IL), Randy Neugebauer (R-TX), Dennis Moore (D-KS) and Gary Miller (R-CA), was "key-voted" by NAHB. It would clarify that a new regulator for the housing-related government sponsored enterprises must base its evaluation of the risk of Fannie Mae and Freddie Mac's portfolio holdings solely on mission and safety and soundness considerations, and not on broader concerns, such as systemic risk. This amendment ensures that a regulator could not use an overly broad interpretation of risk to unnecessarily constrain portfolio activities of Fannie Mae and Freddie Mac, which could disrupt the mortgage markets and impede the GSEs' pursuit of their housing mission.

In addition, NAHB key-voted three anti-housing amendments that were successfully defeated or withdrawn. These amendments would have restricted GSE portfolios, eliminated the affordable housing fund and prevented conforming loan limits from being raised in high-cost areas. The House was expected to complete its work on the bill and cast a final vote on it on May 22. For more information, contact Scott Meyer, x8144.

NAHB Member Benefit: NAHB's actions on GSE oversight reform are aimed at safeguarding a reliable and affordable flow of capital to the nation's housing markets. This is beneficial to our members because affordable credit is the lifeblood of the housing industry, allowing both for the development of much-needed affordable rental housing and for a large portion of the American public to obtain mortgages in the pursuit of homeownership. [return to top]

Testifying before Congress on ways to expand green building,

home builder Ray Tonjes told the Senate Environment and Public Works Committee about how NAHB members are helping to advance affordable, energy-efficient and environmentally friendly construction techniques in the mainstream marketplace. Ray, who chairs NAHB's Green Building Subcommittee, is a custom builder from Austin, TX. Appearing on May 15, he explained that the recent popularity of green building is largely due to its voluntary nature that allows builders and developers the flexibility they need to incorporate the principles of sustainable design. He also reported that NAHB is working with the International Code Council to bring uniformity to sustainable building by developing a residential green building standard that is based on NAHB's recently created Model Green Home Building Guidelines. Speaking on behalf of NAHB and its members, Ray successfully communicated to Congress that the best way for it to help advance the cause of energy-efficient home building is to keep the market free of mandates while expanding federal tax credits that were initially made into law as part of the Energy Policy Act of 2005. Federal tax credits encourage the construction of new energy-efficient homes, promote the use of energy-saving home improvements for existing homes and spur innovative products and methods that will result in even greater energy savings in the field of residential development. Read more in our press release, or contact Calli Schmidt at x8132.

NAHB Member Benefit: NAHB's Model Green Home Building Guidelines are among our greatest member benefits, because they allow builders to make decisions that positively impact energy efficiency, resource conservation and indoor environmental quality throughout the entire design and construction process. As Ray told the committee: "Green means doing the right thing for the builder, the home owner and most importantly, the environment." [return to top]

Builder confidence slipped three more notches in May

due to ongoing concerns about the meltdown in subprime mortgage markets and its effects on housing demand, according to the latest reading of the NAHB/Wells Fargo Housing Market Index. Builders are apparently feeling the impacts of tighter lending standards on current home sales as well as cancellations, and they're bracing for the expected challenges that are ahead. Unfortunately, as NAHB Chief Economist David Seiders explained, "The crisis in the subprime sector has infected other parts of the mortgage market as well as consumer psychology, and as a result the housing outlook has deteriorated." Seiders has adjusted NAHB's official forecast to project that home sales and housing production will not begin improving until late this year, with expectations that the early stages of the recovery, when it comes, will be fairly sluggish. The HMI declined three points this time around to a reading of 30 on a scale in which anything over 50 indicates that more builders view sales conditions as good than poor. All three of the HMI's component indexes fell this month, with the index gauging current single-family sales down two points to 31, the index gauging sales expectations for the next six months down three points to 41 and the index gauging traffic of prospective buyers down four points to 23. Read our press release or view the HMI tables online. Contact: Gopal Ahluwalia (x8480) or Ashok Chaluvadi (x8482).

NAHB Member Benefit: NAHB's economic surveys and analysis help our members achieve a better understanding of current market trends and where they are headed, while our media outreach in this regard helps to firmly establish NAHB as the credible source of information on the housing industry nationwide. This credibility with the media ensures that accurate data on the housing market is transmitted to potential home buyers and the public at large, thereby discounting sensationalized accounts of market conditions that may affect your client's decision to purchase a new home. [return to top]

Housing starts rose slightly in April, but permits hit a 10-year low

according to figures released by the U.S. Commerce Department on May 16. Overall starts were up 2.5% in the month to a seasonally adjusted annual rate of 1.53 million units following downward Commerce Department revisions for the two previous months. Even with the increase, starts were down just over 16% from year-earlier figures. Meanwhile, building permits – a more reliable indicator of housing construction activity – dropped about 9% in April to a seasonally adjusted annual pace of 1.43 million units. This was down 28% from a year ago. Commenting on the report, NAHB Chief Economist David Seiders said, "The pattern of building permits clearly shows that the dramatic downward correction in housing production still is underway. Home buyer demand has been sent into another down leg by the abrupt tightening of mortgage lending standards, and there is an increasingly heavy supply of vacant housing units on the market. Under these conditions, builders are cutting back on new construction and intensifying their efforts to bolster sales and limit cancellations." Single-family starts rose 1.6% in April to an adjusted rate of 1.23 million units, while multifamily starts rose 6.3% to a rate of 303,000 units. See the government's report and NAHB's press release online. [return to top]

Resolutions in the pipeline for consideration at Spring Board

are now available online. To date, five resolutions have been submitted for discussion and potential approval by the NAHB Board of Directors at its meeting early next month. A memo from Resolutions Committee Chairman Bob Nielsen was sent to directors on May 11, summarizing the proposed resolutions and providing staff contacts for more information. That memo is now available on NAHB's Web site for viewing by all NAHB members, and it also provides links to the full-text of each proposal as it becomes available. Proposed resolutions include the following:

1. Sustaining Long-Term Feasibility of Affordable Housing Projects
2. Performance-Based Standards for Plumbing Products
3. Addressing Mortgage Market and Mortgage Lending Problems*
4. Wetlands Resolution*
5. Brownfields Redevelopment*

NAHB Member Benefit: Through the NAHB Resolutions process, any member or HBA may submit new policy proposals for the Board's consideration. This process ensures that NAHB's goals, strategies and official policies are the direct product of its members' concerns and views and allows individual NAHB members to have their voices heard on the national stage. Please direct any questions regarding the Resolutions process to Jay Shackford at x8406.

* full text not yet available
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