Justice Prevails

The NAHB's first venture before the U.S. Supreme Court as a named party resulted in a great victory for members earlier this summer. In a 5-4 decision, the court ruled in favor of our position that the EPA did not need to consider listed endangered species when handing Clean Water Act permitting authority over to the state of Arizona.

Over the course of its 65-year history, the NAHB has filed dozens—most likely hundreds—of amicus curiae, or “friend of the court,” briefs on cases before the Supreme Court where the outcome could affect our members. In many of those cases, the court heeded our arguments and ruled in favor of our position.

But National Association of Home Builders v. Defenders of Wildlife was the first time that we ever appeared before the court in our own case. The odds that the nation's highest court would even consider the case make this accomplishment all the more impressive, as the court accepts less than 1 percent of the petitions it receives.

NAHB v. Defenders of Wildlife started in 2003 when the NAHB intervened in a case brought by that group in their effort to stop the EPA from delegating Clean Water Act permitting to the state of Arizona. Delegating a federal permit program to a state is not new; it streamlines the permitting process and avoids lengthy delays while ensuring that both state and federal environmental protections are taken into account.(see page 78)

In this instance, the Defenders of Wildlife argued that the EPA could not delegate permitting programs without undergoing endangered species consultation with the Fish and Wildlife Service. The environmentalists won in the Ninth Circuit Court of Appeals, and that court effectively required an endangered species consultation for every instance where an Arizona builder needed a stormwater discharge permit. The decision had the potential of putting NAHB members through months of unnecessary consultations and red tape with a dollar cost that would have been astronomical. As a result, the NAHB, along with the HBAs of Central and Southern Arizona, asked the Supreme Court to review the case.

Fortunately, the Supreme Court has ruled in favor of regulatory balance and environmental stewardship by reversing and remanding the lower court's decision. This new decision recognizes that we must always maintain a balance when we look at environmental regulations. We can't say that the Endangered Species Act is an “über-statute” that should slow down regulatory decisions under the Clean Water Act, but we recognize that both laws concern issues that are vital to preserving this Earth for the next generation.

This decision also tells us that the Supreme Court is helping to preserve housing affordability by striking down efforts at unnecessary, duplicative regulation. Congress created the Clean Water Act to prevent, reduce, and eliminate pollution. But it's the Clean Water Act, not the Arid Desert Act. There is no logic to twisting a program designed to protect the waters of the United States to give special considerations to species that have no relation to those waters.

The Clean Water Act also calls for the states, not the federal government, to manage permitting programs when the EPA determines that nine specific criteria have been met. None of those criteria require consultations regarding species protected under the Endangered Species Act. Moreover, forcing the EPA to issue discharge permits in Arizona—which an unfavorable decision would have required—would have cost builders more time and money, making homes less affordable in affected areas.

I think it's very obvious that we all share an important responsibility to protect our endangered and threatened species, and the NAHB is working hard with Congress and the administration to reform the Endangered Species Act with appropriate protections in mind. However, there is no need to tack on additional requirements to the ones that Arizona has already met. The Endangered Species Act does not trump all other important environmental considerations. The Supreme Court has agreed, and we applaud its decision. NAHB v. Defenders of Wildlife is a great victory for our association, for our members, and—most importantly—for housing affordability.

Brian C. Catalde
PRESIDENT, NAHB WASHINGTON, D.C.

Are We There Yet?

The bottom of the housing cycle is not yet in view.

The dramatic downward correction in U.S. housing markets has been underway for roughly two years. In this regard, the NAHB's single-family Housing Market Index (HMI) hit a current-cycle low of 28 in June, down from a high of 72 in mid-2005. The HMI was down by more than 50 percent in all four regions of the country, and all three component measures (current sales, expected sales, and traffic of prospective buyers) had values less than half their 2005 peaks.

Despite the stunning dimensions of the housing correction to date, the single-family housing market still is coping with two major imbalances. First, affordability remains historically low, a problem that's been aggravated by tighter lending standards in connection with the subprime mortgage debacle. Second, inventories of vacant homes for sale (new and existing) have climbed to record highs, boosted by homes put back on the markets by investors and speculators that gobbled them up during the 2003–2005 boom.

In June, the NAHB conducted a nationwide survey of more than 400 single-family builders to gauge market momentum at midyear and to identify builders' production plans for the second half of the year. The signals from this survey have been incorporated into the NAHB's housing starts forecast for 2007, and the outlook for 2008 has been influenced as well.

The NAHB survey asked builders to rate housing market conditions in June, as compared to the recent past. Although 39 percent of respondents said that market conditions were stabilizing, 43 percent said things were still declining and only 9 percent said the markets were improving (the rest were not sure).

The assessment of market momentum in our June survey actually was less optimistic than an assessment garnered from a similar survey conducted earlier in the year. It's clear that the tightening of mortgage market conditions in the wake of the sub-prime debacle contributed heavily to the deterioration of builder views of housing market momentum at midyear. Indeed, 45 percent of builders in our June survey said that tighter lending standards were taking a toll on home sales, and 28 percent said tighter standards were raising sales cancellations.

Two-fifths of the builders said they plan to start about the same number of units in the second half of this year as in the first half. But 36 percent said they plan to start fewer units in the second half, and only 23 percent said they plan to start more. A relatively high proportion of larger companies (those starting more than 100 units per year) said they plan to start fewer units in the second half.

Furthermore, 37 percent of respondents said they had recently revised downward their production plans for the second half of the year, and only 13 percent said they had recently revised their plans upward; the other half had not done a recent revision. Again, a relatively large share of the larger companies (55 percent) had recently revised their plans downward.

The patterns of responses to our midyear survey point toward some further erosion of single-family starts during the second half of the year. The NAHB's current forecast for the second half shows a 4 percent decline from the first-half's pace, with single-family starts bottoming out in the fourth quarter at an annual rate of 1.1 million units—37 percent below the quarterly peak for this housing cycle. We're projecting a modest recovery in 2008, leaving plenty of room to grow in 2009 and beyond.

David F. Seiders
CHIEF ECONOMIST, NAHB WASHINGTON, D.C.

Online registration is now open and housing reservations are being taken for the 2008 International Builders' Show (IBS), being held Feb. 13–16, 2008, at the Orange County Convention Center in Orlando, Fla. Produced by the NAHB, the show is expected to draw more than 100,000 attendees. More than 1,900 exhibitors will showcase their latest products and services at IBS, the largest annual light-construction show in the world, covering more than 1,000,000 square feet. It will also feature nearly 300 education sessions designed to help attendees stay current on industry trends and issues. To receive the early-bird registration discount and to request a room in your state hotel room block, you must register by Oct. 26, 2008. Attendee registration and hotel information can be found online at www.BuildersShow.com.

The NAHB was disappointed when a Senate vote effectively ended consideration of immigration bill S. 1639 on June 28, but urged lawmakers not to abandon efforts to overhaul the nation's immigration laws. “Though the Senate fell short today in keeping the legislation alive, the nation's home builders strongly support comprehensive immigration reform that would protect our borders; provide a process by which immigrants can legally enter the country to work to meet the labor demands of a growing economy; and create an enforcement system that is fair, efficient, and workable for all U.S. employers,” says Jerry Howard, the NAHB's executive vice president and CEO. The Secure Borders, Economic Opportunity and Immigration Reform Act of 2007 (S. 1639), was shelved for the foreseeable future when lawmakers were unable to muster the 60 votes necessary to cut off debate and proceed to a final vote. The motion failed on a 46 to 53 ballot. “Everyone has a stake in reforming the nation's immigration laws in a fair and just manner,” says Howard. “We hope to continue working with members of Congress to craft immigration policy that protects our borders without placing an unfair burden on small business owners.”

In an effort to increase jobsite safety and reduce the chance of job-related accidents, the NAHB recently produced and released two safety products, the Fall Protection Video and the NAHB-OSHA Fall Protection Handbook, English-Spanish. The two products, available through BuilderBooks, provide easy-to-follow instructions on how to prevent construction-related falls. According to NAHB Labor, Safety, and Health, more than one-third of all fatal accidents in the construction industry are a result of falls. The publications are essential tools for learning how to select and use the right ladder; protect against injuries surrounding stairways, leading edges, window and wall openings, and floor holes; use personal fall arrest systems; safely build and erect exterior and balloon-framed walls; and much more.