Source: Yahoo! News —
National Association of Home Builders CEO Jerry Howard joins Yahoo Finance Live to discuss the U.S. housing market, mortgage rates, and homebuilder sentiment.
Video Transcript
SEANA SMITH: Let’s take a look at the housing market, because more weakness in real estate. Residential starts at dropping just over 4%– 4.2% in October compared to a month ago. Building permits also declining, down 2.4%.
Here to tell us a little bit more about the reality that’s happening right now in the real estate market, we want to bring in Jerry Howard, CEO of the National Association of Homebuilders. Jerry, it’s been about a month since we last spoke with you. We also got mortgage rates out this morning, falling to 6.61%. I guess from the data points that we’ve gotten over the last couple of weeks, just what’s your assessment of the housing market today?
JERRY HOWARD: Well, my assessment is based upon our members’ assessment. We poll the members every month and our index declined again just this week, earlier this week, for the 12th month in a row. It’s down to about 33, with 50 being a neutral market. So what the homebuilders across the country are saying is we’re seeing some really tough times out there right now.
SEANA SMITH: Jerry, how much worse do you think it could potentially get?
JERRY HOWARD: Well, this is as bad as it’s been since 2011. It did get into single-digits during the depth of the Great Recession. I don’t think we’re going to go anywhere near that. But I think it’s not going to bounce back anytime soon either.
RACHELLE AKUFFO: And, Jerry, Rachelle here, what are the top concerns that your members have right now?
JERRY HOWARD: Hi, Rachelle. Yeah, the members are really concerned about a couple of things– the cost of capital, not just mortgage rates. Remember, when the end consumer has to pay more, the builder’s paying more for capital as well up upfront. The cost of capital and the availability of capital in the commercial banks seems to be tightening. And that’s a real problem for our guys.
Likewise, we still have problems with the supply chain. We still have problems with regulations. And we still have problems with labor. So we’re facing pretty much a perfect storm right now.
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Get someone to graph the elements of the housing problem then keep that in front of consumers and politicians. Many places have an affordable housing shortage. A shortage of trades people was hindered by the housing crash of 2008. If you found steady employment you weren’t in a hurry to go back to a job that hurt you. There was a huge jump in building materials. Tariffs made that worse. Many Developers usually prefer building one expensive home than several smaller homes. Land and development costs keep increasing. That’s just a few elements. Its time to start focusing on doing something about housing. You can’t solve a problem without knowing why, then having the will. Also try being cost effective and try to minimize using tax dollars.