NAHB: Recovery Still Vulnerable to Tight Credit, Slow Manufacturing

As the vocabulary surrounding the housing market switches from ""crisis"" to ""recovery,"" the ""National Association of Home Builders (NAHB)"":http://www.nahb.org/ is expressing deep concerns about a few factors currently limiting the recovery and stagnating home building in some areas.

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Tight credit for both builders and home buyers, inaccurate appraisals, and a lull in the building supply market are three major concerns for the NAHB.

""Banks, appraisers and regulators swung the pendulum too far and have failed to return to normal business practices,"" the NAHB stated in a recent press release.

New home inventories hover near record lows, and the peak home building season is just around the corner. However, rather than ramping up production and hiring additional construction workers, many builders sit with their hands tied.

""I talk to many of our builder members who are expressing increasing frustration that they can't get access to construction loans to develop lots in markets where demand is on the upswing,"" said Rick Judson, chairman of the NAHB.

""Not only is this keeping workers sidelined, it is frustrating potential home buyers and slowing the recovery,"" Judson said.

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Borrowers face a similar environment when they attempt to obtain mortgage loans.

The NAHB charges the appraisal industry with exacerbating the problem with inaccurate appraisals, which sometimes lead to cancelled home sales.

Reiterating views set forth in a recent white paper, the NAHB said in its press release this week, ""policymakers and appraisers also need to confront a flawed appraisal process for home buyers and home builders.""

The NAHB suggested in its ""white paper"":https://themreport.com/articles/nahb-appraisal-reform-necessary-for-sound-market-2013-02-25 that the industry adopt a uniform set of standards and best practices to promote accuracy and ensure transparency.

""Responding"":http://www.appraisalinstitute.org/ano/DisplayArticle/PastIssue/Default.aspx?volume=14&numbr=3/4&id=19429 to the NAHB's white paper, the ""Appraisal Institute"":http://www.appraisalinstitute.org/ insisted ""many of NAHB's proposed reforms already exist and simply need to be enforced."" The Institute pointed the finger in another direction, charging, ""it is the residential mortgage finance system that needs to be reformed.""

Outside of tight credit standards and inconsistent appraisals, the NAHB says its members struggle to obtain building supplies when they are able to attain financing.

As home construction declined drastically during the housing crisis, building supply manufacturing also slowed. Many manufacturers ""had to close plants and cut back production dramatically,"" said David Crowe, chief economist at the NAHB.

As building ramps up in some markets, ""the supply chain is starting to strain,"" Crowe said. ""Producers are reluctant to expand while credit remains tight, and the most recent result has been skyrocketing prices.""

Judson suggested, ""Restoring the flow of credit to home builders with viable projects and fixing the residential appraisal process will not only help to put America back to work, it will strengthen communities across the land and provide badly needed tax revenues that local governments need to fund schools, police and firefighters.""