Monday Morning Briefing Letter - 08/25/2008 (Plain Text Version)

By Sandy Dunn, NAHB President and
Jerry Howard, NAHB Executive VP and CEO

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Builders and HBAs are spreading the word

about the newly instituted first-time home buyer tax credit to help spur sales in their local markets.

Moving quickly to broadcast the message about the $7,500 tax credit, many are pointing customers to NAHB's newly developed Web site at www.federalhousingtaxcredit.com for all the basic information they need. As of now, this Web site is attracting approximately 10,000 unique visitors per day. Meanwhile, Centex, which specializes in homes for first-time buyers, has reported encouraging results from a survey of 25- to 65-year-olds who had not owned a home in the past three years. Of those responding, 75% said they thought the home-buyer tax assistance effort was a good idea, and more than half said they were likely to buy a home with the availability of the credit in mind. Centex has also provided materials and training to its division leaders and sales counselors, encouraging them to make customers aware of the tax credit. Meanwhile, Pulte on Aug. 5 announced a promotional effort in which it will match the $7,500 tax credit with a discount for any buyer of its homes through Sept. 15.

KB Home, Lennar and many other builders are likewise making sure their potential customers are in the know about the new tax credit via their own Web, TV and other promotions, and directing folks to the federalhousingtaxcredit.com Web site. KB Home is linking the tax credit's availability to its Web site advertising with the message "There's never been a better time to buy." Widespread HBA efforts, which along with the big builders' actions, were also recently profiled in an NBN Online cover story, include everything from putting a link to the tax credit Web site on the HBA's home page to mentioning the credit on a local TV program, issuing local press releases and hosting a discussion of the credit on their blog site. Read more in the most recent NBN and in the previous edition, as well. For details on the tax credit, contact Rob Dietz, x8285; for information on publicizing this great consumer benefit, contact NAHB Public Affairs at x8447 or check out the materials on our www.nahb.org/mythbuster site.

A proposed streamlining of the Endangered Species Act

was announced by the U.S. Department of the Interior a little more than one week ago. This proposal, which is in line with a U.S. Supreme Court ruling two years ago in the case of NAHB v. Defenders of Wildlife, includes changes to Sec. 7 of the ESA and clarifies when other federal agencies are required to consult with the Fish and Wildlife Service or NOAA on the protection of threatened or endangered species. For home builders and developers, the move could reduce permitting delays and the potential for changes and mitigation measures on certain projects. NAHB Environmental Issues Committee Chairman Ernie Platt explains that the change is a stop-gap measure to provide guidance to federal agencies and the regulated community and prevent potential abuses of the ESA's sweeping regulatory provisions now that the listing of the polar bear under the ESA has opened the door to the possibility of more species being protected from the presumed effects of climate change. "If the tactic employed by environmentalists under the NAHB v. Defenders lawsuit had prevailed, it is likely these same groups would now be suing under the guise of climate change to halt other vital federal and state permitting programs that support residential development," said Ernie. Meanwhile, confusion remains over the actual regulatory standards that federal agencies should use to judge the impact of residential projects occuring in so-called "critical habitat." Read more about this important new development in the latest edition of NBN Online. Contact: Calli Schmidt, x8132. [return to top]

A slightly improved outlook for new single-family home sales

was registered in the latest NAHB/Wells Fargo Housing Market Index (HMI), released on Aug. 18. While the overall measure of builder confidence held firm at a record low of 16, it is a good sign that two out of three of the HMI's component indexes rose in August, and may be an indication that we are nearing the bottom of the long downswing in new-home sales, noted NAHB Chief Economist David Seiders. The HMI's component index gauging current sales conditions rose one point to 16, while the component gauging sales expectations for the next six months rose two points to 25. Meanwhile, the component gauging traffic of prospective buyers was unchanged from its record low of 12. "With the passage of crucial housing legislation last month that created an attractive home buyer tax credit, there is a sense that home sales may soon be reaching a turning point," noted NAHB President Sandy Dunn in our press release. "Builders are anticipating the stimulative effects of this legislation and are optimistic that the tax credit will give those buyers who've been sitting on the fence the reason they need to jump back into the market." Read more in our press release, or view the HMI tables online, at www.nahb.org/hmi. Contact: Gopal Ahluwalia (x8480) or Ashok Chaluvadi (x8482). For help with media inquiries, contact Paul Lopez (x8409) or Liz Warin (x8495). [return to top]

Housing affordability improved for a 3rd consecutive quarter

in April-June of 2008, according to the latest NAHB/Wells Fargo Housing Opportunity Index (HOI), released on Aug. 19. The HOI indicates that 55% of all new and existing homes that were sold in this year's second quarter were affordable to families earning the national median income of $61,500, up from 53.8% of homes sold that were affordable in the previous quarter. Contributing factors included historically favorable mortgage rates – though these did rise a bit from the first quarter – as well as steady family income nationwide and somewhat lower house prices. For a 12th consecutive time, Indianapolis held the crown of most affordable major housing market, with nearly 92% of all homes sold there in the second quarter being affordable to median-income earners. Taking over the title of least affordable major housing market this time around was New York-White Plains-Wayne, NY-NJ, where just 11.4% of new and existing homes sold were affordable to median-income earners. This was the first time that a major housing market outside of California was designated the least affordable since the HOI's inception in 1991. Read more in our press release, or see the HOI tables, historic data and details at www.nahb.org/hoi. Contact Gopal Ahluwalia (x8480) or Rose Quint (x8527) for details on the HOI data; contact Paul Lopez (x8409) for help with media inquiries. [return to top]

A nearly 3 percent decline in single-family housing starts

to a seasonally adjusted annual rate of 641,000 units this July indicates that builders are continuing to practice aggressive inventory management – with the understanding that this painful but necessary reining-in of production will help bring supply and demand back into balance and restore greater health to our industry. "While there is definitely a sense that we are nearing the bottom of the downswing in home sales, builders are not ready to start ratcheting up production just yet – nor should they be, until after sales begin to rebound and the inventory overhang is reduced further," noted NAHB Chief Economist David Seiders. "We anticipate that the new first-time home buyer tax credit will help bring about that rebound, and NAHB's forecast projects that the ongoing contraction in housing starts will end in the first quarter of 2009." For the second month in a row, starts numbers were skewed by a building code change in New York City that prompted a 23.6% decline in multifamily starts and contributed to an 11% decline in the total figure to a seasonally adjusted annual rate of 965,000 units. Builders also pulled fewer permits for anticipated new-home construction in July, with single-family permits down 5.2% to a 584,000-unit rate, the lowest since August 1982. Meanwhile, overall permit issuance and multifamily permit issuance, both heavily affected by the New York City data, declined 17.7% to 937,000 units and 32.4% to 353,000 units, respectively. Read NAHB's press release or see the government's report online. Contact Paul Lopez (x8409) for help with media inquiries. [return to top]

The EPA has agreed to delay its proposal on ELGs

for the construction industry following a series of discussions with, and letters from, NAHB. EPA had been under court order to revise its Clean Water Act regulations by 2009, and had planned to issue its proposal on effluent limitation guidelines (ELGs) this summer. Instead, the agency has decided it will hold off on this action to give a Small Business Advocacy Review Panel time to examine the rule's cost implications. NAHB members are serving on the panel, which is expected to meet periodically through the end of September. Later this year, EPA will likely follow up with a proposal that takes the panel's concerns into account.

ELGs are technology-based standards that were designed to control discharges from industrial processes and wastewater treatment. NAHB has long opposed their application to the construction industry because, unlike water coming from a pipe, it's impossible to control how much rain will fall on a construction site. Meanwhile, applying ELGs to the home building industry for storm water discharges could result in builders having to meet numerical limits. NAHB has told Congress that a better solution is a more flexible approach that reflects the challenges, uncertainties and geographic differences associated with storm water discharges across the country. NAHB has also urged Congress to direct EPA to adopt streamlined, cost-effective permit processes; ensure that all water quality enforcement programs are founded on sound science; and provide educational and outreach materials to construction site operators to help increase compliance. Read more in the next NBN Online, or contact Calli Schmidt (x8132) for details. [return to top]

Remodeler perceptions of market demand

for current and future residential remodeling projects remained fairly subdued in this year's second quarter, according to NAHB's latest Remodeling Market Index (RMI), released on Aug. 12. The current market conditions indicator of the RMI was unchanged from the first quarter at 41.8, while the future expectations measure rose just one-tenth of a point to 38. "Remodelers are experiencing slower activity in markets nationwide, particularly for major improvements to owner-occupied housing," noted NAHB Remodelers Chairman Lonny Rutherford, CGR, CAPS, CGP, a remodeler from Farmington, NM. "Most remodelers are taking on a greater number of smaller jobs to maintain their business," he said. The RMI shows a gradual decline in overall remodeling activity since 2005. Read more in our press release, or view the RMI tables and historic information at www.nahb.org/rmi. [return to top]

The Monday Morning Briefing will not publish next week

and NAHB offices will be closed on Monday, Sept. 1, for the federal Labor Day holiday. When we get back, we'll be gearing up for the Fall Board of Directors meeting later in September, so stay tuned for all the big news and information coming up. In the meantime, have a pleasant and safe Labor Day weekend! [return to top]