FHFA Rescinds Problematic Proposed Upfront Fees Based on Debt-To-Income Ratio

In January, the Federal Housing Finance Agency (FHFA) announced a new fee for borrowers with debt-to-income (DTI) ratios at or greater than 40 percent on loans acquired by Fannie Mae and Freddie Mac. The housing industry strongly opposed this DTI ratio-based fee. The fee would be difficult for lenders to implement and confuse borrowers with potential pricing changes throughout the loan application process. The fee was scheduled to take effect on Aug. 1.

In response to industry concerns, on May 10, FHFA announced it rescinded this loan fee on borrowers with a DTI ratio greater than 40 percent.

In its press release, FHFA Director Sandra Thompson called the feedback from the industry valuable and said that to continue the dialogue FHFA will “provide additional transparency on the process for setting the Enterprises’ single-family guarantee fees and will request public input on this issue.”

The press release further states that details about the upcoming Request for Input (RFI) on the single-family guarantee fee pricing framework will be released shortly.

*Note: All articles have been redistributed from NAHBnow.com*


Protect Your Business: Never Underestimate the Importance of Strong Passwords

May 4 is World Password Day, created by Intel several years ago to raise awareness about the importance of strong passwords and to promote better password habits. Passwords are critical gatekeepers to your (and your clients’) digital information, business records and identities.

Use today to review your password practices to ensure your first line of defense in your company’s cybersecurity plan is strong.

What are some good password practices? Here are several, courtesy of the Federal Trade Commission:

  • Make your password long, strong and complex. That means at least twelve characters, mixed with uppercase and lowercase letters, numbers and symbols. Avoid common words, phrases or information in your passwords.
  • Don’t reuse passwords used on other accounts. Use different passwords for different accounts so that if a hacker compromises one account, they can’t access other accounts.
  • Use multi-factor authentication, when available. For accounts that support it, two-factor authentication requires both your password and an additional piece of information to log in. The second piece could be a code sent to your phone, or a random number generated by an app or token. This protects your account even if your password is compromised.
  • Consider a password manager. Most people have trouble keeping track of all their passwords. Consider storing your passwords and security questions in a reputable password manager, an easy-to-access application that stores all your password information. Use a strong password to secure the information in your password manager.
  • Select security questions only you know the answer to. Many security questions ask for answers to information available in public records or online, like your zip code, mother’s maiden name, and birth place. That is information a motivated attacker can obtain. Don’t use questions with a limited number of responses that attackers can easily guess – like the color of your first car.
  • Change passwords quickly if there is a breach. If you receive a notification from a company about a possible breach, change that password and any account that uses a similar password immediately.

For more information on keeping your information secure visit NAHB’s data privacy and cybersecurity resources.

*Note: All articles have been redistributed from NAHBnow.com*

Computer Hacker

May is National Home Remodeling Month

Spring is typically when many Americans make plans to remodel their homes — from embarking on projects that help boost their home’s efficiency to adding more of their personal style to their living space to tackling much-needed maintenance. As consumers consider which home improvement projects to take on, it’s important to understand the benefits of hiring a professional remodeler to make their dream home a reality.

National Home Remodeling Month, which takes place every year in May, offers a great opportunity to learn more about the highly skilled work of these trained experts.

“National Home Remodeling Month is a great opportunity to highlight this multifaceted industry and the numerous ways even a small remodeling project can vastly improve home owners’ quality of life,” said NAHB Remodelers Council Chair Alan Archuleta.

NAHB makes it easy to promote the occasion with a variety of resources available through the Remodeling Month Toolkit. This online resource provides remodelers, HBA staff and consumers with the latest industry news, tips and research. It also features customizable content that HBAs can tailor to fit specific audiences and markets, including:

  • Sample social media posts, images and videos
  • Templates for outreach to local news outlets
  • Customizable articles on trending topics for websites and newsletters
  • Promotional videos and insightful web articles for consumers

As part of its Remodeling Month celebration, NAHB Remodelers will host a pair of Shop Talk discussions for members to engage with each other and learn more about business improvement strategies. The Shop Talks will be held from 4-5 p.m. ET. Click the links below to register:

Visit nahb.org for more information.

National Home Remodeling Month is sponsored by Westlake Royal Building Products.

*Note: All articles have been redistributed from NAHBnow.com*

Interior of home being remodeled

House Passes Bill to Repeal Onerous Energy Codes Grant Program

The House today approved the Lower Energy Costs Act (H.R. 1), NAHB-supported legislation that would repeal a section of the Inflation Reduction Act that provides $1 billion to pressure state and local governments to adopt costly and restrictive energy codes.

NAHB also worked to get an amendment added to the legislation that would prohibit the Department of Energy from implementing its proposed rule regarding gas stoves, or any other rule that would limit consumer access to gas stoves.

While NAHB supports the adoption of cost-effective, modern energy codes, we oppose these grant programs that prevent amendments to the energy code that accommodate local conditions and a cost-effectiveness analysis.

NAHB believes that forcing the adoption of costly energy codes to qualify for these grants would exacerbate the current housing affordability crisis and limit energy choices for consumers. Adoption of the 2021 International Energy Conservation Code can cost a home buyer as much as $31,000 in additional costs and can take as long as 90 years for home owners to see a payback from these investments.

Prior to the House vote, NAHB sent a letter to lawmakers designating support for the legislation and the gas stove amendment as “key votes” because of their importance to the home building industry.

H.R. 1 also repeals a provision in the Inflation Reduction Act that addresses energy efficiency in older homes. NAHB stands ready to work with Congress to develop a practical energy efficiency program that addresses the great need for energy efficiency improvements in older homes.

NAHB is now urging the Senate to follow suit and advance these important provisions in H.R. 1.

Learn more about NAHB’s efforts on energy codes.

*Note: All articles have been redistributed from NAHBnow.com*

Capitol Building in Washington, D.C.

HUD Proposes New Federal Flood Risk Management Standards

The Department of Housing and Urban Development (HUD) has published a proposed rule in the Federal Register that would revise HUD’s regulations governing floodplain management and the protection of wetlands to implement the Federal Flood Risk Management Standard (FFRMS).

HUD believes this proposal will improve the resilience of HUD-assisted or financed projects to the effects of climate change and natural disasters, and provide for greater flexibility in the use of HUD assistance in floodways under certain circumstances.

HUD proposed an FFRMS rule during the Obama administration, and it was not finalized by the end of President Obama’s term in office. When the FFRMS rule was first proposed, NAHB raised strong concerns that the seriously flawed rule — which would dramatically expand regulated floodplain areas — would result in less affordable multifamily housing construction. President Trump ultimately withdrew the proposed rule.

HUD’s new FFRMS proposal includes substantial differences from its Obama-era predecessor — particularly for determining the horizontally expanded FFRMS floodplain. NAHB is carefully reviewing these changes to determine their potential impact on multifamily housing supply.

Through changes to HUD’s Minimum Property Standards, the department will also require new elevation requirements for single-family homes located in a 100-year floodplain to qualify for FHA mortgage insurance. NAHB will seek members’ feedback to draft public comments, which must be submitted to HUD by May 23, 2023.

View the proposed rule in the Federal Register.

*Note: All articles have been redistributed from NAHBnow.com*

US Capitol Building

Single-Family Starts Remain Lackluster, but Expected to Begin Sustained Rebound Later This Year

Single-family production remained at an anemic pace in February as builders continue to wrestle with elevated mortgage rates, high construction costs and tightening credit conditions that threaten to be exacerbated by recent turmoil in the banking system.

Led by gains in apartment construction, overall housing starts in February increased 9.8% to a seasonally adjusted annual rate of 1.45 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The February reading of 1.45 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 1.1% to an 830,000 seasonally adjusted annual rate. However, this remains 31.6% lower than a year ago. The multifamily sector, which includes apartment buildings and condos, increased 24% to an annualized 620,000 pace.

“Builders continue to grapple with increased market uncertainty due to ongoing building material supply bottlenecks, volatile mortgage rates and increased jitters in the banking sector,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Ala. “At the same time, builder sentiment has been edging higher in the early part of 2023 as a significant amount of housing demand exists on the sidelines and resale inventory is limited.”

“Despite persistent supply-side challenges, rising builder confidence is signaling a turning point for home building later in 2023,” said NAHB Chief Economist Robert Dietz. “Starts were up in February given a limited pullback for interest rates. We expect volatility in the months ahead as ongoing challenges related to construction material costs and availability continue to act as headwinds on the housing sector. However, interest rates are expected to stabilize and move lower in the coming months, and this should lead to a sustained rebound for single-family starts in the latter part of 2023.”

On a regional basis compared to the previous month, combined single-family and multifamily starts were 16.5% lower in the Northeast, 70.3% higher in the Midwest, 2.2% higher in the South and 16.8% higher in the West.

Overall permits increased 13.8% to a 1.52 million unit annualized rate in February. Single-family permits increased 7.6% to a 777,000 unit rate. Multifamily permits increased 21.1% to an annualized 747,000 pace.

Looking at regional permit data compared to the previous month, permits were 2.8% lower in the Northeast, 9.6% higher in the Midwest, 10.9% higher in the South and 30.0% higher in the West.

*Note: All articles have been redistributed from NAHBnow.com*

Remodeled Home

Single-Family Market Share Continues to Shift from Large Population Centers

While nationwide single-family housing starts have slowed in the past year, the largest drop on a percentage basis is occurring in the most dense counties, where housing costs are highest. Meanwhile, multifamily growth was robust throughout much of the nation at the end of 2022, with the notable exception in high-density markets, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the fourth quarter of 2022.

“While the largest single-family market continues to be core counties of large and small metropolitan areas, the urban core market share has fallen compared to pre-Covid levels,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “During the fourth quarter of 2019, urban core markets of small and large metro areas represented 47.2% of the single-family market. This share declined to 44.5% in the fourth quarter of 2022, representing a persistent shift in buyer preferences to live outside of densely populated areas.”

The largest growth in single-family market share came in rural markets (micro counties and non-metro micro counties), rising from 9.4% in the fourth quarter of 2019 to a share of 11.8% in the fourth quarter of 2022.

“Due to aggressive federal reserve monetary policy and high mortgage rates, all submarkets in the HBGI posted lower single-family growth rates in the fourth quarter of 2022 than a year earlier,” said NAHB Chief Economist Robert Dietz. “Rural areas were the only market with a positive single-family home building growth rate in the final quarter of 2022.”

The fourth quarter HBGI shows the following market shares in single-family home building:

  • 16.0% in large metro core counties
  • 24.7% in large metro suburban counties
  • 9.5% in large metro outlying counties
  • 28.5% in small metro core counties
  • 9.5% in small metro outlying areas
  • 7.4% in micro counties
  • 4.4% in non-metro/micro counties

Meanwhile, the multifamily construction market remains elevated above historical levels, with six of the seven submarkets experiencing growth rates above 15% during the final quarter of 2022. However, large metro core counties were an outlier and registered the smallest growth rate, up only 1.5% from the fourth quarter of 2022.

*Note: All articles have been redistributed from NAHBnow.com*

Real Estate

Missing Middle Housing Production Lags

Missing Middle Housing Graph

The missing middle construction sector includes development of medium-density housing, such as townhouses, duplexes and other small multifamily properties.

While townhouse construction has trended higher in recent quarters, the multifamily segment of the missing middle (apartments in two- to four-unit properties) has disappointed. For 2021, there were only 12,000 starts of such residences. This is flat from 2020, during a period of time when most construction segments expanded. For 2022, the total increased but to only 16,000. Nonetheless, this marks the best year for this type of multifamily construction since the Great Recession.

For the fourth quarter of 2022, there were just 3,000 two- to four-unit housing construction starts. This is flat from a year prior.

NAHB Chief Economist Robert Dietz provides additional details in this Eye on Housing post.

Learn more about missing middle housing.

*Note: All articles have been redistributed from NAHBnow.com*


Multifamily Developer Confidence Remains in Negative Territory in Fourth Quarter

While the two main confidence indexes for multifamily housing increased slightly in the fourth quarter, they both remained in negative territory, according to results from the Multifamily Market Survey (MMS) released today by the National Association of Home Builders (NAHB). The MMS produces two separate indices. The Multifamily Production Index (MPI) increased two points to 34 compared to the previous quarter and the Multifamily Occupancy Index (MOI) increased four points to 49.

The MPI measures builder and developer sentiment about current production conditions in the apartment and condo market on a scale of 0 to 100. The index and all of its components are scaled so that a number below 50 indicates that more respondents report conditions are getting worse than report conditions are improving.

The MPI is a weighted average of three key elements of the multifamily housing market: construction of low-rent units-apartments that are supported by low-income tax credits or other government subsidy programs; market-rate rental units-apartments that are built to be rented at the price the market will hold; and for-sale units—condominiums. The component measuring low-rent units increased five points to 41, the component measuring market rate apartments dropped one point to 38 and the component measuring for-sale units remained even at 23.

The MOI measures the multifamily housing industry’s perception of occupancies in existing apartments. It is a weighted average of current occupancy indexes for class A, B, and C multifamily units, and can vary from 0 to 100, with a break-even point at 50, where lower numbers indicate decreased occupancy. The MOI increased four points to 49, indicating that the market is close to being stable.

“Many developers continue to see strong demand for multifamily housing, but in some markets supply is catching up to demand,” said Lance Swank, president and co-owner of Sterling Group, Inc. in Mishawaka, Ind., and chairman of NAHB’s Multifamily Council. “In most markets, developers face challenges with regulatory costs and delays, and obtaining financing for new construction.”

“It is appropriate that multifamily developers are expressing some caution and that the MPI remains below 50, given the way starts have been outpacing completions,” said NAHB Chief Economist Robert Dietz. “This is also consistent with NAHB’s forecast that multifamily production will slow measurably from the very strong rates it sustained through most of 2022.”

For data tables on the MPI and MOI, visit nahb.org/mms.

For more information on the NAHB Multifamily program, please visit NAHB Multifamily.

*Note: All articles have been redistributed from NAHBnow.com*

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