NAHB Pushes for Solutions to Keep Homes Resilient and Affordable

March 19th, 2021 by Editor

Housing production weakened in February as ongoing high material costs and interest rates continue to affect the housing industry. The U.S. Department of Housing and Urban Development and the U.S. Census Bureau report overall housing starts decreased 10.3% to a seasonally adjusted annual rate of 1.42 million units.

The 1.42 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 8.5% to a 1.04 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, decreased 15.0% to a 381,000 pace.

“Despite strength in buyer traffic and lack of existing inventory, builders are slowing some production of single-family homes as lumber and other material costs, along with interest rates, continue to rise,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Tampa, Fla. “Shortages of lumber and other building materials, including appliances, are putting future construction expansion at risk.”

NAHB chief economist Robert Dietz spelled out the effects the shortages and other challenges are having on the public and the economy.

“While single-family starts for the first two months of the year are 6.4% higher than the first two months of 2020, there has been a 36% gain over the last 12 month of single-family homes permitted but not started as some projects have paused due to cost and availability of materials,” he said. “Single-family home building is forecasted to expand in 2021, but at a slower rate as housing affordability is challenged by higher mortgage rates and rising construction costs. The February winter storm Uri also held down home building in Texas and some neighboring states.”

Regionally, compared to January, combined single-family and multifamily starts are lower across three regions (39.5% in the Northeast, 34.9% in the Midwest and 9.7% lower in the South) and only went up in the West, with a 17.6% increase.

With those numbers falling and builder confidence down halfway through the current month, the NAHB has urged Congress to factor in housing affordability when seeking solutions to build more resilient communities that can withstand and recover from natural disasters.

Testifying before the House Transportation and Infrastructure Subcommittee on Economic Development, Public Buildings, and Emergency Management, Fowke said any efforts to improve or increase the efficiency or resiliency of the U.S. housing stock should focus on cost-effective, market-driven solutions.

New homes built to modern codes are efficient, safe and resilient, which makes increasing code stringency on a tri-annual basis unnecessary, Fowke told lawmakers.

“Evidence from FEMA and others support this fact and demonstrate that modern building codes have been very effective in preventing the destruction of homes due to various storms, fires and earthquakes,” he said. “For example, after Hurricane Michael hit Mexico Beach, Fla., in 2018, studies showed that homes built post-2000 remained standing, while older homes did not.”

A full 130 million homes, out of the nation’s housing stock of 137 million, were built before 2010 and are not subject to the new building codes now in effect.

“Therefore, it is imperative that Congress focus on improving the older homes, structures and infrastructure that are less resilient to natural disasters,” said Fowke. “Federal incentives, tax credits, grants and other assistance programs would go a long way to facilitate and help fund the upgrades needed to ensure our homes and communities are ready for the future.”

He also stressed that state and local governments must retain authority over land use and their code adoption processes so they can continue to direct community development and implement the codes that best fit their jurisdictions.

“Model codes are intended to be flexible. What is best for Florida is not necessarily what is best for Nevada,” he noted. “Relying on existing building codes, heeding the expertise of state and local governments, focusing on improving the existing housing stock and providing incentives is the best way to encourage greater resiliency in the nation’s housing stock. This approach will mitigate the effects of future natural disasters and also preserve housing affordability for new and existing homes.”

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