Washington Briefs July/August 2003

Showcase Bound for Hot Springs, VA Nov. 2-5
Mark your calendars for Nov. 2nd-5th. That’s when Showcase, the annual convention and trade show for the building systems industry, is bound for Hot Springs, VA. This year’s event will be held at The Homestead, one of the finest spa and recreational resorts on the East Coast.

Organized by the Building Systems Councils of the National Association of Home Builders, Showcase has been called the biggest little trade show in the home building industry for its intimacy and access to some of the most prolific home producers in the U.S. This year’s event includes expanded trade show hours, educational seminars and networking opportunities. At the Showcase party this year attendees will be treated to cigars, martinis, casinos, and flappers.

Register by Aug. 29th and be entered to win one of three Homestead gift certificates that can be used at nearly every restaurant, pro shop, gift shop, and recreational venue at the resort.

Early Bird Registration is available in the “Meetings & Eventsâ€? section of www.nahb.org. For questions and hotel information, please contact the NAHB University of Housing Office of the Registrar at (800) 368-5242 x8338. For sponsorship and exhibitor information, contact Marlene Adams at madams@nahb.org.

April New Home Sales Rise Beyond One-Million
Fueled by low interest rates and rising consumer confidence, sales of new single-family homes rose 1.7% in April to a seasonally adjusted annual rate of 1.03 million units, the Commerce Department reports. It was the third time this year that new-home sales went above the million-unit mark and experts predict another historic high in home sales within the United States by year-end. Sales of existing homes also rose strongly in April.

“Today’s reports on both new and existing home sales in April are very reassuring that housing continues to be a pillar of strength for the nation’s economy. This sales performance provides solid evidence of the confidence that buyers continue to have in homes as investments,â€? says Kent Conine, NAHB president. “There has been another downshift in mortgage interest rates and a further boost in consumer confidence since April.â€?

New-home sales rose in three out of four regions in April, with gains of 13.4%, 0.6% percent and 4.3% recorded in the Midwest, South and West, respectively. In the Northeast, where weather has delayed construction starts, sales fell nearly 18%.

“Sales of both new and existing homes were slightly above their first-quarter averages in April, and the fundamentals of this housing market continue to exhibit remarkable strength looking forward,â€? notes David Seiders, NAHB’s chief economist. “With inventories of unsold new homes remaining at quite a healthy level, with impressive house-price performance on a year-over-year basis, and with our latest surveys indicating significant optimism among home builders, we’re clearly headed for a great second quarter. When you add in the terrific interest rate picture, all systems are ‘go’ for home sales. We are definitely on track to equal or surpass the record home sales of 2002.â€?

WTO Issues Lumber Decision
On May 27th the World Trade Organization (WTO) concluded in a preliminary ruling that the duties imposed by the U.S. Commerce Department on imports of Canadian softwood lumber were based on a flawed methodology and that the tariffs should be rescinded.

But the issue is far from decided. The WTO is expected to issue a final ruling on the U.S. subsidy determination in July, around the same time that a NAFTA panel will weigh in on the issue. Canada has also filed WTO and NAFTA challenges to overturn the anti-dumping duties now in effect.

“WTO’s ruling reaffirms what we’ve been saying all along: The U.S. Commerce Department’s findings that Canadian softwood lumber is subsidized has no merit. Lumber trade barriers are bad economic policy that needlessly penalize home builders, home buyers and other U.S. consumers of softwood lumber. It’s time to overturn the tariffs and let free trade prevail,â€? says Bobby Rayburn, NAHB’s first vice president.

American consumers are currently paying duties totaling more than 27% on Canadian lumber shipments into the U.S. The U.S. relies on Canada for approximately one-third of the lumber it needs. The current 27% duties can add more than $1,000 to the cost of building a new home, imposing a hidden tax on American home buyers, the NAHB says.

“Clearly, it would be impossible to meet the demand for housing without imports,â€? says Rayburn. “And since we can’t significantly increase lumber production or lumber mill employment in the U.S. because we don’t have any more trees available, it’s time to let free trade triumph so that home buyers and renters won’t have to continue to pay the price for fraudulent protectionist tariffs.â€?

Energy Star Reaches Milestone
The NAHB recently commended the U.S. Environmental Protection Agency (EPA) for passing an important energy-related milestone this year. Since 1995 when the program was launched more than 100,000 homes have been constructed under the EPA’s voluntary, consumer-oriented, market-driven Energy Star program. The EPA and NAHB marked the occasion in joint remarks by EPAAdministrator Christie Whitman and NAHB President Kent Conine during the NAHB Spring Boards.

“NAHB considers acceptance and expansion of the Energy Star program paramount to our continued success when it comes to conserving energy,â€? says Conine. “Energy Star is the perfect mix of technological advances, consumer appeal, energy conservation and green building for the builder, the buyer and the nation. This unique partnership between the EPA and the nation’s builders helps home owners conserve energy. Homes built today are 100% more energy efficient than homes built in the 1970s because of two factors: voluntary programs like Energy Star that make it easy for builders to promote conservation to home buyers, and new construction materials that help save on energy use. Our goal is to do what we can to help the EPA, new home buyers and home owners by expanding market- and technology-driven initiatives that encourage maximum energy efficiency at minimum costs.

“These programs are helping consumers, builders, utilities and government agencies realize energy savings without adding exorbitant costs that jeopardize homeownership for families,â€? Conine says.

New Tax-Credit for First Timers?
Legislation creating a new tax credit for first-time home buyers was introduced in June h by Sens. Debbie Stabenow (D-MI), Gordon Smith (R-OR) and Mark Dayton (D-MN). “The First-Time Homebuyers’ Act of 2003â€? would provide a tax credit of up to $3,000 for an individual and up to $6,000 for a married couple to help with a new-home purchase. To be fully eligible, first-time buyers have to be in the 27% tax bracket or lower during the first year of their purchase — creating eligibility caps of $67,700 for single taxpayers, $96,700 for heads of households and $112,850 for joint returns.

Texas Developer Wins Congressional Seat
June’s special election in Texas resulted in a win for Randy Neugebauer, a longtime land developer and home builder, who defeated fellow Republican Mike Conaway in a tight congressional run-off election to succeed retiring Rep. Larry Combest (R-Texas).

Neugebauer (R-Texas) will finish the Combest’s two-year House term.

With all 207 precincts reporting, Neugebauer had 28,546 votes to Conaw
ay’s 27,959, for a 587 vote margin.

NAHB supported Neugebauer and helped launch a pro-housing vote. A longtime member of NAHB, Neugebauer serves on the association’s board of directors and is a former NAHB national vice president.

BUILD-PAC, the political action committee of NAHB, contributed the legal maximum of $10,000 to Neugebauer’s campaign — $5,000 for the primary and $5,000 for the runoff election.

During the campaign, Neugebauer stressed that job growth and housing affordability for his constituents. “One of the things we have to make sure in America is that we have an environment where small business can flourish and thrive and certainly tax cuts is one way to do that,â€? Neugebauer says.

Builder Confidence Rises In May; Expectations Back Up To Speed
Builder confidence in the market for new single-family homes rallied in May as a further downshift in mortgage interest rates and improving consumer confidence considerably brightened the outlook for future sales activity.

NAHB’s Housing Market Index (HMI), a monthly gauge of builder sentiment, rose four points to 56 in May, regaining much of the ground it lost earlier this year due to poor weather, war and economic jitters.

“The spring home buying season is under way, and builders are encouraged by the strong demand they are seeing,â€? says Kent Conine, NAHB president.

“The latest measures of consumer confidence have shown considerable improvement, and this is good news for home builders,â€? adds David Seiders NAHB chief economist. “While concerns about availability and cost of lots for development continue in many markets, builders are solidly optimistic about being able to sell homes that are getting built. Expectations for sales in the next six months are back up to speed with their level at the beginning of the year.â€?

The HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Home builders are asked to rate current sales of single-family homes and sales expectations for the next six months.

All three component indexes gained substantially in May. The index gauging current sales of new single-family homes rose four points to 61, while the index gauging sales expectations for the next six months and the index gauging traffic of prospective buyers each rose six points to 68 and 41, respectively.

“Builders are on track for a very healthy year in 2003 as the market for new single-family homes continues to exhibit stability and strength,â€? says Seiders. “We are now forecasting that new-home sales and starts in this category will be essentially on par with last year’s solid numbers.â€?

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