Monday Morning Briefing Letter - 01/21/2008 (Plain Text Version)

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

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Joining forces to push for much-needed GSE oversight reform,

NAHB and the Financial Services Roundtable's Housing Policy Council took decisive action on Jan. 16 aimed at breaking a congressional deadlock on one issue that has so far kept the legislation from moving forward.

Citing continued liquidity problems in the jumbo mortgage market, NAHB and the Housing Policy Council (HPC) expressed their combined support for a temporary increase in the conforming loan limit to allow Fannie Mae and Freddie Mac to purchase mortgages in high-cost areas as part of prompt action on GSE reform legislation. Specifically, our two groups are calling on the Senate to swiftly move legislation similar to House-passed legislation (H.R. 1427), which would reform the oversight of Fannie Mae and Freddie Mac and allow them to increase liquidity in the nation's mortgage markets. However, while H.R. 1427 includes a provision calling for a permanent adjustment for high-cost loan areas based on the area median home sales price and up to 150% of the national limit (something NAHB favors and the HPC opposes), both groups are now supporting the idea of making that increase a temporary, two- year deal. At the end of that time, the increase would be terminated if the jumbo market returns to a normal spread between conforming and non-conforming mortgage rates. Said NAHB President Brian Catalde, "With the potential for an economic recession increasing, now is the time for all of us to put aside our parochial interests and focus on the job of stabilizing the housing market and getting the economy back on track. The Housing Policy Council and NAHB are committed to doing just that by working with other industry stakeholders, the administration and the Senate to move GSE reform now and get the job done." Read more in our press release, or contact Scott Meyer, x8144.

NAHB Member Benefit: With two powerful trade associations that have previously been on opposing sides of the issue of conforming loan limits both getting behind an approach that the Administration supports, GSE oversight reform now has significantly greater political momentum. Such reform is necessary to bring greater liquidity to mortgage markets, particularly in high-cost areas.

Builder confidence hasn't changed much

over the last five months, hovering within the same low, two-point range on the NAHB/Wells Fargo Housing Market Index since September. The latest HMI reading, reported on Jan. 16, showed a one-point increase on the confidence scale to 19, following a downwardly revised 18 reading in December and similar 19 readings in both October and November of 2007. In January, the HMI's component index gauging sales conditions for single-family homes remained unchanged, while the component gauging sales expectations for the next six months rose two points to 28. The component gauging traffic of prospective buyers rose one point to 14. Regionally, the HMI results were mixed, with the Northeast posting no change in its HMI score, the Midwest posting a two-point gain and the South registering a three-point gain, while the West posted a five-point decline. Read NAHB's press release or see the HMI tables online for more. Contact Gopal Ahluwalia (x8480) or Ashok Chaluvadi (x8482) for help interpreting the HMI data; for help with media inquiries, please contact Paul Lopez (x8409).

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]

Builders reduced production of new homes in December

and pulled fewer permits in efforts to manage the inventory of units on the market, according to the latest data from the U.S. Commerce Department, released Jan. 17. Single-family starts were down 2.9% to a seasonally adjusted annual rate of 794,000 units in the final month of 2007. Meanwhile, a sharp reduction in the more volatile multifamily sector contributed to an overall 14.2% decline in nationwide housing starts for the month to a one million-unit rate, the lowest since May of 1991. On the whole, the numbers show that home builders are doing what's necessary to reduce the inventory of new homes on the market and reposition themselves for a time when conditions warrant an increase in building activity – most likely by the second half of 2008. Overall permit issuance for the month was down 8.1% to a seasonally adjusted annual rate of 1.07 million units, with single-family permits down 10.1% to 692,000 units and multifamily permits down 4.1% to 376,000 units.

Also included in the latest Commerce Department report, annual numbers for the housing market reveal that overall housing starts declined nearly 25% for all of 2007, with a total of 1.35 million units started in the year. Single-family starts were down 28.7% for the year to 1.05 million units, while multifamily starts were off 8.4% to 308,000 units. Overall permit issuance for new homes and apartments declined by just over 25% in 2007 to 1.38 million units, with a 29% decline on the single-family side and a 12.5% decline on the multifamily side. Read our press release or the Commerce Department's report online. Contact Paul Lopez (x8409) for help with media inquiries. [return to top]

The Census Bureau will keep providing essential remodeling data

thanks in part to NAHB actions. Earlier this year, we learned that the Bureau was planning to stop producing residential remodeling data, such as quarterly statistics on the amount spent on improving and maintaining residential structures in this country, and other helpful information. Census has traditionally spent about $1 million per year to acquire and process this data, produce an annual report that breaks remodeling spending down by type of job and provide a number to the Bureau of Economic Analysis that is used to generate the remodeling component of residential fixed investment (which totaled $178 billion, or about 1.5% of GDP, in 2006). In all, the remodeling information provided by the Census Bureau has been used heavily by NAHB in economic research and policy analysis, and widely used by our members to track industry developments.

The Census Bureau was slated to give all this up in 2008 and use the $1 million it usually spends on remodeling data to help improve coverage of the economy's service sector. NAHB strongly objected, and undertook a series of actions aimed at heading off this plan. These actions included letters, phone calls and face-to-face meetings with members of Congress, the Census Bureau and the Department of Commerce. Such efforts paid off on Jan. 14, when the Census Bureau informed NAHB that it had found enough savings elsewhere in its budget to keep producing residential remodeling statistics through 2008. This is a temporary victory, however; Census has made no promises beyond this year. Contact Paul Emrath (x8449) for more information.

NAHB Member Benefit: NAHB's efforts have helped ensure that our remodeler members can continue to benefit from substantial government data that helps them make appropriate business decisions and spotlights the true importance of residential remodeling to the overall economy. [return to top]

Free online resources are available to help NAHB members

navigate today's challenging business environment, and your national association wants to make sure you're aware of what's out there. NAHB President Brian Catalde reached out to the national membership just after the holidays with an e-mail message assuring you that "We are collaborating around the clock witih industry organizations and the government to reverse the housing downturn, working with the national media to combat the negative media coverage, and producing a supply of resources to help you sell homes in this challenging market." Several resources that are available right now can either be customized to include specific company information or used "as is." Following are links to these resources. In order for them to work, members must be logged in to www.nahb.org with their NAHB user name and password (if you need help finding your login ID or password, please contact Member Services at 800-368-5242):

Consumer Flyer: Top Reasons You Shouldn't Wait to Buy a New Home
Consumer Handout: Answers to Your Home Buying Questions
Consumer Handout: Is Buying a Home in Today's Economy a Good Idea?
Plus, five new Consumer Print Advertisements for newspapers, newsletters and more.

In addition, NAHB members can continue to take advantage of the following continuously updated resources:

Buy Now Promotional Toolkit: complete with ready-to-use consumer materials
Back to Basics Toolkit: designed to help members establish new strategies for business success;
BizTools: Hundreds of time-saving, money-making and cost-cutting business resources.

NAHB Member Benefit: NAHB is committed to helping our members navigate the ongoing housing downswing through ongoing education, resource development, and advocacy efforts. In addition to the resources listed above, NAHB educational sessions at the IBS in Orlando this year will be focusing on strategies for survival and success. Read about them here. Contact: Gwyn Donohue, x8447. [return to top]

See The New American Home 2008 at the upcoming IBS

and you won't be disappointed. Celebrating its 25th anniversary at next month's show, The New American Home has a proud tradition of displaying innovative building materials, cuttting-edge design and the latest construction techniques provided by the National Council of the Housing Industry (NCHI) — The Leading Suppliers of NAHB.

As NAHB prepares to launch our new National Green Building Program, this year's New American Home will hold the distinction of being the first show home built and certified using the program's new scoring tool. It's a 6,725-square-foot, plantation style house that's located within a gated, 11-lot development called Waters Edge, along the banks of Orlando's Lake Nona. For more information and to preview the home, be sure to check out the great photos and floorplans that are showcased in NBN Online's Jan. 14 edition.

NAHB Member Benefit: NAHB produces the most important building trade show for all aspects of the housing and light commercial construction industries all year -- the International Builders' Show – that not only provides the most comprehensive forum for builder resources under one roof but also attracts worldwide media attention and positive coverage of the building industry. The IBS may be your most valuable member benefit due to all that you come away with in terms of business education, professional contacts and knowledge of the latest products and services geared specifically to your needs. [return to top]

NAHB mourns the passing of Bob Moomey,

a professional media consultant and expert in teaching message development, presentation skills, communication and crisis management strategies who played a major role in NAHB's highly regarded spokesperson training program. As head of Bob Moomey Communications, he helped develop media training as it is practiced in the modern business world. Starting in the early 1970s, Bob coached more than 15,000 NAHB builder and associate members over the course of his career, helping them become more effective in media interviews, speeches and other communication forums. Bob died in his Westlake Village, Calif. home on Jan. 10, at the age of 71. Over the years, he became very much a part of the NAHB family, and those of us who learned from him during the past three decades will remember Bob with the greatest respect and admiration. A memorial is being arranged for March 8 in Chicago. Contact: Gwyn Donohue (x8447). [return to top]

NAHB offices will be closed on Martin Luther King Day,

which is Monday, Jan. 21. We'll be back right after the federal holiday, and gearing up on the road to the International Builders' Show that's happening in February. In the meantime, have a nice, long weekend, everyone! [return to top]