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 WASHINGTON, July 20 /PRNewswire/ -- Congressional approval of President Clinton's $500 billion deficit-reduction program is absolutely essential to sustain the nation's economic recovery and to keep fixed rate mortgages in the 7 percent range, the lowest rate in more than 20 years, according to J. Roger Glunt, president of the 165,000-member National Association of Home Builders (NAHB).
 Final action on the plan is expected during the next two weeks after differences in the House and Senate bills are worked out by a joint House/Senate Conference Committee.
 Glunt was responding, in part, to claims made yesterday by the United Homeowners Association that provisions of the deficit package would increase the costs of mortgage servicing and that the overall plan is bad for home owners. "Nothing could be further from the truth," Glunt said.
 "This plan represents a serious attempt to cut the cancerous growth of the deficit," he added. "The alternative is to do nothing and to continue the gridlock on the deficit for at least another three years, inflicting catastrophic damages on the economy, the housing market and the democratic political process."
 The financial market, Glunt added, gave President Clinton a vote of confidence following his election, primarily because it believed that the new administration would take steps to restore discipline to the budget process and cut the growth of the mounting federal deficit.
 "Since last fall, interest rates on long-term mortgages have dropped a full percentage point (from 8 percent to 7 percent), reducing the payments on a $135,000 mortgage by $92 a month or $1,104 a year," he added. "This decline in mortgage rates has opened the door to homeownership for thousands of American families who previously were priced out of the market and has put thousands of dollars into the pockets of individual home owners who have refinanced $1 trillion in mortgage debt during the past two years."
 The drop in rates has been the one bright spot in an otherwise lackluster economic recovery, he added. "Without the drop in interest rates and the corresponding upturn in home sales, home building and spending power of American consumers, the recovery would be in serious trouble," Glunt said.
 An upturn in housing construction is critical to the nation's job growth, particularly during the early stages of an economic recovery. Construction of 100,000 additional single-family homes creates 176,000 jobs in construction and construction-related industries.
 Housing starts in June were running at a seasonally adjusted annual rate of 1,254,000, the same rate as the previous month, according to Census figures released today. "1993 will fall far short of being a banner recovery year for housing but we are on a steady growth path for single-family housing starts and home sales," Glunt added. NAHB is projecting 1.26 million starts for 1993, up from the 1.2 million units started last year.
 The House-approved economic package contains several important housing provisions, including permanent extension of mortgage revenue bonds and the low-income housing tax credit and changes in the tax rules governing passive losses and pension funds. All of these provisions should help stimulate construction of much-needed affordable housing. The housing provisions are less favorable in the Senate bill.
 Glunt noted that reauthorization of the mortgage revenue bond program, which expired last July along with the low-income housing tax, would provide mortgage money as low as 6 percent for borderline buyers trying to purchase their first home. The low-income housing tax credit, he added, is also vitally important because it is one of the few tools available to construct affordable rental housing.
 "The bottom line is that enactment of the President's deficit reduction plan would be good for housing, good for the economy and good for American consumers," said Glunt.
 NAHB was one of the first business organizations to endorse the president's deficit cutting plan. NAHB-member firms employ a total of more than 6.5 million Americans and construct about 80 percent of all new homes built each year. During a typical year, new housing construction and the home remodeling and repair business account for about 5 percent of the nation's total domestic economy.
 -0- 7/20/93
 /CONTACT: Jay Shackford of the National Association of Home Builders, 202-822-0406/

CO: National Association of Home Builders ST: District of Columbia IN: CST SU: ECO

KD-MH -- DC027 -- 3474 07/20/93 15:00 EDT
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Publication:PR Newswire
Date:Jul 20, 1993

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