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The National Association of Home Builders (NAHB) recently sent a letter — signed by more than 10,000 of its members — to President Biden, urging “immediate action” to address issues that “threaten to derail the current housing and economic expansion.”
The letter, written on behalf of the 140,000 members of NAHB, cites rapidly rising interest rates, rising home prices and rents, and the rising cost of lumber and building materials for significantly decreasing housing affordability, especially for entry-level buyers and renters.
“A shortage of entry-level housing has strong implications for the wealth, health, and stability of American communities,” the April 27 letter states.
The letter continues: “Despite low existing inventory, builders across the nation are reporting that current sales conditions on the NAHB/Wells Fargo Housing Market Index declined to a five-month low as a sharp jump in mortgage rates and persistent supply chain disruptions continue to unsettle the housing market.”
It adds that, “more ominously,” single-family builder future sales expectations posted a large decline in March, falling to their lowest level since June 2020.”
Mortgage interest rates have risen nearly 2 percentage points since the start of the year and recently stood at just over 5%, “the highest level in more than a decade, according to Freddie Mac,” the letter states. “Together, these economic factors have put the housing market under extreme duress.’
The letter notes that “unprecedented volatility” in lumber prices has further exacerbated affordability woes. The volatility in lumber prices has raised the cost of a typical single-family home by more than $18,600 since last August, the NAHB said. “Tariffs on Canadian lumber shipments into the U.S. are further fueling this price volatility and acting as a tax on American home buyers at a time when housing affordability is already at a more than 10-year low,” the letter states.
“This is why we are asking you to suspend tariffs on Canadian lumber imports into the U.S.,” it adds.
The letter also seeks federal regulatory reform “to ease housing affordability woes.”
“Reducing burdensome regulations that account for nearly 25% of the price of building a single-family home and more than 30% of the cost of a typical multifamily development will provide more homeownership and rental housing opportunities for all Americans,” it states.
The letter goes on to point out that the White House has taken aggressive steps in other areas — working to ease energy costs by tapping the Strategic Petroleum Reserve and allowing a blend of ethanol fuel to be sold this summer; moving to eliminate steel and aluminum tariffs from the United Kingdom — but has not yet shown the “same sense of urgency” with the housing sector, which “accounts for more than 15% of the nation’s gross domestic product.”
“If the housing sector falters, the economy will surely follow,” the letter states. “An important first step to address housing affordability challenges in this current high-inflation environment would be to immediately suspend tariffs on softwood lumber imports from Canada and to move quickly to enter into negotiations with Canada to pursue a new, long-term softwood lumber agreement.”
The NAHB also asks the Biden administration to seek “immediate remedies to lumber and building material supply chain bottlenecks,” which it says will lower construction costs and increase production of affordable housing.
“Keeping housing in the national forefront and addressing these critical housing affordability issues will reduce the risk of recession and help the residential construction industry to lead the economy forward,” the letter concludes.
The letter itself takes up just over a page; the remaining 352 pages are filled with the signatures of 10,000 NAHB members, in most cases listed 30 to a page. The members are listed in alphabetical order by state.
The White House has not yet issued a response to the letter.