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NATIONAL ASSOCIATION OF HOME BUILDERS COMMENTS ON HOUSING STARTS DATA

NATIONAL ASSOCIATION OF HOME BUILDERS COMMENTS ON HOUSING STARTS DATA
 WASHINGTON, Dec. 17 /PRNewswire/ -- New housing starts fell 2 percent in November to a seasonally adjusted annual rate of 1,066,000, guaranteeing that the housing industry will finish 1991 with the lowest number of new housing starts since 1945, the U.S. Commerce Department reported today.
 "With just one more month left to count, we expect to end the year with about 1 million housing starts," said Mark Ellis Tipton, president of the National Association of Home Builders (NAHB). "That will make 1991 the worst housing year in the post-World War II period."
 The previous post-World War II lows were recorded during the recession of the early 1980s when builders started 1.084 million units in 1981 and 1.062 million in 1982.
 Single-family housing starts stabilized in November at an annual rate of 892,000, about the same as the previous month. But multifamily construction continued its prolonged decline, dropping another 12 percent from October to November to an annual rate of 174,000.
 Regionally, the pace of construction fell 8.2 percent in the Midwest and 2.7 percent in the West. Housing construction was unchanged in the South and up 1.7 percent in the Northeast.
 Despite the dismal numbers for 1991, Tipton expressed optimism that 1992 would be a rebound year for the housing sector.
 "The makings of a housing-led economic recovery are starting to fall into place," he noted. "Fixed-rate mortgages are available in the 8 percent range, the lowest rate in 15 years, the inventory of unsold new homes is extremely low in most markets around the country and the administration is taking serious steps to help ease the credit crunch for builders and other small businessmen."
 Tipton added that if the Congress and the administration move quickly early next year to enact housing tax incentives as part of an overall economic recovery package, the housing market could rally in the spring of 1992. "A $2,000 tax credit for families buying their first home would create 500,000 new jobs and stimulate construction of an additional 265,000 affordable homes," he said.
 The tax credit proposal, Tipton added, has strong support among the American people and on both sides of the political aisle. According to a recent Wall Street Journal/NBC survey, 85 percent of those polled favored a tax credit for first-time home buyers as a way to stimulate today's economy.
 Tipton also noted that a Dec. 16-17 meeting in Baltimore of the nation's chief bank examiners should help speed the implementation of new lending guidelines previously announced by the White House and the Treasury Department.
 In opening the Baltimore meeting, Treasury Secretary Nicholas Brady told the bank examiners that "no one would disagree that our economy is in the vise-like grip of a credit crunch. There has been a reduction in the amount of credit available to finance the needs of businesses and consumers. ... Loan losses have gone up and economic activity has gone down. The result is a market in which some people are unable to borrow and some bankers are afraid to lend."
 In explaining the new lending guidelines for banks and lenders, Deputy Treasury Secretary John Robson said that "it makes sense for bank examiners to encourage lenders to work with borrowers experiencing temporary problems, not to make it unreasonably difficult to do."
 Robson added: "It also makes sense for examiners to take a balanced approach to real estate loans. Why rigidly condemn or criticize the renewal of even troubled real estate loans if the only alternative is foreclosure, total loss and the additional burdens on already distressed markets?
 "And it makes sense for examiners not to assume doomsday scenarios in evaluating loans. Our troubled economy will turn around and so will troubled credits. There has to be a time line and some assumptions of normality applied. That's particularly true for real estate appraisals and loan evaluation. That's not dangerous forbearance. That's common sense and responsible regulation."
 Michael Boskin, chairman of the President's Council of Economic Advisors, told the banking regulators that ending the credit crunch is critical to turning around the economy. "The availability of credit is obviously vital to the well-being of the economy," he said. "The economy cannot grow at a reasonable rate without the resumption of a reasonable rate of bank lending."
 Tipton echoed the comments by Brady, Robson and Boskin, saying that "getting the new lending guidelines out to examiners and banks in the field is a critical first step in efforts to ending the credit crunch."
 -0- 12/17/91
 /CONTACT: Jay Shackford of the National Association of Home Builders, 202-822-0406/ CO: National Association of Home Builders ST: District of Columbia IN: SU: ECO


TW-MH -- DC016 -- 3169 12/17/91 17:39 EST
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