Economists participating in NAHB's Construction Forecast Conference webcast this week agreed that the housing market is on the road to recovery, though some major speed bumps continue to cause concern.

According to NAHB Chief Economist David Crowe, "Home buyer tax credits clearly did their job and got people back into the marketplace." And now that those credits are gone, the housing momentum is being carried forward by low interest rates, pent up household formations, stabilizing prices and budding employment growth. At the same time, factors that continue to drag on housing at this time include the critical shortage of credit for new and existing projects, competition from short sales and foreclosures, and regional economic disparities. Dave's forecast anticipates 552,000 single-family housing starts in 2010, a 25% gain from last year's 445,000-unit level. As for the multifamily sector, a shortage of available financing and a significant "shadow inventory" of homes lost to foreclosure are expected to keep starts activity there quite subdued this year, with an 18% decline to 93,000 units projected. However, in 2011, the sector should rebound to 150,000 units. NAHB's forecast also calls for nationwide home prices to remain flat this year and post a modest increase in 2011.

Meanwhile, panelist Mark Zandi, chief economist at Moody's Analytics, said he expects solid job growth to help buoy the housing recovery. He is anticipating average monthly job gains of 125,000 this year, 250,000 in 2011 and 300,000 in 2012. He also pegs GDP growth at 3% this year, approximately 4% in 2011 and close to 5% in 2012. Our other panelist, Macroeconomic Advisers President Chris Varvares, had a somewhat more optimistic outlook than Zandi, saying that GDP will rise 3.7% this year and that annual housing starts will hit about 1.2 million by year-end 2011. All of the panelists agreed that the Federal Reserve will likely maintain interest rates near rock-bottom levels through the end of this year, that the chance of a double-digit recession is fairly remote, and that policymakers will need to take action within the next two years to increase revenues and cut spending in order to keep the housing and economic recovery on track. For detailed coverage of the forecast conference, please see our press release and the next edition of Nation's Building News Online. Contact: MondayMorningQuestions@nahb.org.

NAHB Chief Executive Officer Jerry Howard embarked on a whirlwind media tour earlier this week, meeting with some of the top news outlets in New York. Over the course of one very busy day, Jerry met with real estate editors at The Wall Street Journal and CNN Money, and also appeared on a live panel discussion session on CNBC. Topics of discussion included the strength of the nascent housing recovery and a range of housing finance and economic issues of central importance to the nation's home builders. Such media tours have proven to be an excellent way of reaching out to key media outlets and transmitting NAHB's messages to them clearly and powerfully. They are also an effective means of building solid working relationships with members of the press. For more information, contact: MondayMorningQuestions@nahb.org. 

Builder Confidence
The latest NAHB/Wells Fargo Housing Market Index (HMI), released May 17, indicates that builder confidence in the market for newly built, single-family homes rose three points to 22 this month, which is its highest level in more than two years. All three of the HMI's component indexes posted gains, with the most encouraging of those being a 3-point uptick in the index gauging sales expectations for the next six months. "This means that builders are more comfortable that the market is truly beginning to recover, and that positive factors for buying a new home — low interest rates, great selection, stabilizing prices, and a recovering job market — are taking the place of tax incentives to generate buyer demand," noted Chief Economist David Crowe. Read our press release or see the HMI tables for details. Additional information is also available at www.nahb.org/hmi.

Housing Starts and Permits
Nationwide housing starts rose 5.8% to a seasonally adjusted annual rate of 672,000 units in April as the home buyer tax credit program wound down, according to government figures released on May 18. Single-family starts surged 10.2% to a seasonally adjusted annual rate of 593,000 units, the strongest pace since August of 2008. Meanwhile, multifamily starts posted an 18.6% decrease to a 79,000-unit rate, offsetting a big gain posted by that sector in the previous month. Issuance of new building permits fell 11.5% in the month to a rate of 606,000 units, with a 10.7% decline on the single-family side and a 14.7% decline on the multifamily side. Read more in NAHB's press release, or view the government's report online. 

Housing Affordability
Bolstered by favorable interest rates and low house prices, nationwide housing affordability remained near record highs in this year's first quarter, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI), released on May 20. The HOI indicated that 72.2% of all new and existing homes sold during this year's first quarter were affordable to families earning the national median income of $63,800. This was marginally higher than the HOI score for the final quarter of 2009, and very close to the all-time record high of 72.5% that was set during the first quarter of 2009. Indianapolis-Carmel and Youngstown-Warren-Boardman, Ohio-Pa., shared the ranking as the most affordable major housing markets in the country this time around. Also near the top of the list were Syracuse, N.Y.; Dayton, Ohio; and Grand Rapids-Wyoming, Mich.  Read more in our press release or view the HOI tables online at: www.nahb.org/hoi.  

As legislation that would offer tax-free rebates for residential energy-efficiency improvements continues to move through Congress, a special NAHB task force has developed recommendations to ensure that our members will be tapped to participate in the work resulting from this initiative. NAHB's Senior Officers reviewed the report of our Jobs Creation Via Energy Efficiency Retrofits Task Force earlier this month and directed the association staff and staff of the Home Builders Institute to repurpose existing training and education programs to meet the requirements outlined in H.R. 5019, the proposed Home Star legislation that has now been approved by the House of Representatives and is being debated in the Senate. Meanwhile, NAHB continues to study the concept of rebate aggregators as outlined in the House bill. These entities would approve contractors to participate in the program, funnel the rebates to approved home owners and audit the results of the work. The task force has also identified a number of ongoing issues that are either being pursued by the Administration or that need attention to ensure a successful program — including those concerning home energy performance assessment and labeling; home owner financing for retrofits; and valuations of energy efficient features in appraisals. The Senior Officers have commended task force members, led by Environmental Issues Committee Chair Chuck Collett, for their extensive research in this endeavor. Additional information about the task force's work and the legislative proposals now before Congress may be accessed at: www.nahb.org/energyefficiencyretrofits. Read more in Nation's Building News, or contact: Calli Schmidt, 800-368-5242, x8132.

The Occupational Safety and Health Administration announced on April 22 that it is increasing the penalties it levies for workplace safety violations in an effort to provide a greater deterrent for those occurrences. Under the policy change, the average penalty for a serious violation will increase by three-fold. Several changes are being made to the classification system that OSHA uses for assessing penalties. For example, the time frame for considering an employer's history of violations is being expanded from three years to five. And, penalties are being increased by 10% for employers that have been cited for any high-gravity, serious, willful, repeat or failure-to-abate violations within the previous five years. Meanwhile, the minimum penalty for a serious violation is being increased and the reduction in a penalty that an OSHA area director can offer at an informal conference is being limited to 30%. In addition, final penalties will now be calculated serially, instead of the current practice that arrives at a proposed penalty by adding up all of the penalty reductions and then multiplying that total percentage by the gravity-based penalty. On a related note, OSHA has also recently announced a new Severe Violators Enforcement Program that increases its focus on repeatedly recalcitrant employers. Under this program, OSHA intends to increase inspections at worksites identified by the agency, including mandatory follow-up inspections and inspections of other worksites of the same employer where similar hazards and deficiencies may be present. Read more in Nation's Building News, or contact Marcus Odorizzi at 800-368-5242, x8590.

Tightened Lending Standards
In an effort to return to more prudent underwriting, Fannie Mae has announced that it is tightening lending standards for adjustable rate and interest-only mortgages. Starting on June 19, home buyers who acquire an ARM with an initial fixed-rate period of five years or less will have to qualify at the note rate plus 2% or at the fully indexed rate. Because few consumers are choosing ARMs in the current market, the immediate impact of this change should not be substantial; however, ARMS will become more popular as interest rate levels increase. As for interest-only mortgages, Fannie Mae is structuring this option for borrowers who are in a position to choose it as a financial management tool rather than as a tool to make their monthly payments more affordable. To be eligible for interest-only loans, borrowers must demonstrate the ability to qualify for the loan when the interest-only feature ends and the payment is based on principal and interest. The borrower must also have a credit score of at least 720 and have 24 months of reserves at a minimum. Meanwhile, Fannie Mae has also announced the retirement of seven-year balloon mortgages as a standard mortgage product. More information is available in Nation's Building News.


Helping Distressed Home Owners Reenter the Housing Market
In separate news, Fannie Mae is making it easier for distressed borrowers to purchase new homes in the future. Changes described in its Announcement SEL-2010-05 are designed to reward owners who worked with their loan servicers when they experienced difficulty repaying their mortgage debt. Under Fannie's new policies, home owners who avoided foreclosure by exercising pre-foreclosure solutions such as a deed-in-lieu of foreclosure, short sale or pre-foreclosure sale will not have to wait so long to qualify for a mortgage to buy another home. For example, after a deed-in-lieu of foreclosure, home owners currently have to wait four years, but the new policies allow those who make a downpayment of 20% to get back in the housing market within just two years; under extenuating circumstances, such as the loss of a job, they will only have to put 10% down. Fannie Mae says these changes are aimed at addressing the needs of the housing market following the recession. The moves should also help home builders, mortgage lenders and Realtors by contributing to the ongoing housing recovery. For more information on either of the above items, please contact Steve Linville at 800-368-5242, x8597.

Our local and state HBAs across the country have been looking forward to it all month, and now the time is near. National Membership Day happens this Tuesday, May 25. Between 12:00 noon and 5:00 p.m. EDT on that day, NAHB's Senior Officers and other volunteer leaders will be manning the phones and taking HBA calls to our special toll-free hotline at 800-899-6242 as our locals report their new member recruitment numbers for the month. So far, more than 400 HBAs have indicated their intention to participate in this very important event, which is up an impressive 25% from last year. Remember that, for each new member joining in May, two Spike credits will be awarded to the recruiter, and that Spike members will also qualify for tickets to the Spike Party at the 2011 International Builders' Show for recruiting just one member or associate member. We are very excited about this upcoming, tremendously important event, and would like to thank and congratulate all of our participants and volunteers ahead of time. We're looking forward to your call!

To learn more about National Membership Day or the special Spike credits and prizes, visit the National Membership Day page on NAHB.org, call the NAHB membership staff at 800-368-5242, x8347, or email them at membership@nahb.com.

Getting Physical: Passing the LIHTC Property Inspection
2:00-3:00 p.m., EDT - Wednesday, June 9
NAHB Member Fee - $59 per phone site
Housing Credit Certified Professional (HCCP) designation holders - FREE
Housing Credit Group (HCG) members - FREE
Owners, managers and compliance specialists involved in Low Income Housing Tax Credit (LIHTC) projects can learn how to be better prepared for State Housing Finance Agency inspections through this special webinar event. Speakers will discuss frequently-cited deficiencies and how to remedy them before the inspection. For more information and to register, visit this link. Contact: Carmel McGuire, 800-368-5242, x8207.    

Real Strategies for Building Green in a Rebounding Market
2:00-3:00 p.m., EDT - Tuesday, June 15
NAHB Member Fee: $25
NAHB BuilderBooks will host this educational webinar focusing on the opportunities and benefits of building green in today's market. All participants will receive a copy of "Build Green and Save: Protecting the Earth and Your Bottom Line," a $22 value, and one hour of continuing education credit for all NAHB professional designations.To register, visit www.nahb.org/builderbookslive. Registrants will receive e-mail confirmations. Contact: Patricia Potts, 800-368-5242, x8224.