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Weak-New Home Sales Show Need For Housing Stimulus

January 28, 2008

Weak-New Home Sales Show Need For Housing Stimulus New single-family home sales fell 4.7 percent in December, according to figures released today by the U.S. Commerce Department. December’s seasonally adjusted annual rate of 604,000 units was 40.7 percent below a year ago. “While the Administration and Congress are off to a good start in crafting an economic stimulus package to boost the ailing economy, the continuing deterioration in the housing market, as reflected in today’s numbers, underscores the need to do more to stabilize housing and the economy,” said Jerry Howard, executive vice president and CEO of the National Association of Home Builders (NAHB). Specifically, Howard called on lawmakers to: - Raise the Fannie Mae/Freddie Mac conforming loan limit for two years instead of one and link this change to reform of the housing government-sponsored enterprises. “This will increase the availability of mortgage money in high-cost markets,” said Howard. “The one-year fix won’t work. By the time the plan is passed, regulators sign off and Fannie and Freddie are ready to implement it, we’ll be down to less than a six-month window to help borrowers in high-cost markets.” - Allow businesses to carry back net operating losses for five years. “This would save jobs and maintain the viability of many businesses by providing them with a much-needed infusion of capital to prevent the liquidation of assets,” said Howard. - Expand the mortgage revenue bond program, which allows state and local governments to issue tax-exempt debt that may be used to finance mortgages at below-market interest rates. “Fed policymakers are meeting this week and they can do their part to help by continuing to cut interest rates and inject liquidity into the financial markets,” said NAHB Chief Economist Dave Seiders. Regionally, new-home sales fell 6.5 percent in the South, 6 percent in the West and 1.2 percent in the Midwest. The Northeast posted a 6 percent gain. All regions were down substantially on a year-over-year basis, ranging from a 27.4 percent fall-off in the Northeast to a 55.8 percent drop in the Midwest. The inventory of new homes for sale was down 2.3 percent to 495,000 units in December as builders continued to gradually work down their inventory. The equivalent months’ supply the December sales pace edged up to 9.6 months from 9.4 months in November.

Source: National Association of Home Builderst

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