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FHA Announces Increases To Loan Limits in 2023 The FHA on Dec. 1 announced its loan limits for 2023. The nation-wide rise in median home prices indicates most buyers across the country will see increases. The FHA floor will increase from $420,680 to $472,030 for single-family home loans. The floor amount is the lowest the FHA loan limit can be for any area of the country. FHA’s ceiling loan limits, the maximum loan amount the agency will insure, will increase from $970,800 to $1,089,300 for a single-family property, even higher in some states and territories.
Action Needed on Transformers NAHB and other industry groups are urging policymakers to resolve an ongoing supply chain shortfall that is affecting delivery of much-needed transformers and other electrical switch gear. The scarcity of transformers is having a dramatic effect on new construction projects and repairs of homes, commercial buildings and infrastructure. Urge your members of Congress to support the implementation of the Defense Production Act to address the supply chain crisis for electric distribution transformers.
Advocacy Digest Brad Boycks, Executive Director
Housing Committees Get New Chairs for 2023-2024 Committee chairs in both houses of the legislature were recently announced for the upcoming 2023-2024 legislative session. State Senator John Jagler, moves from chair of the housing committee to become the chair of the education committee. Replacing Jagler as housing chair in the State Senate is Senator-elect Romaine Quinn of Rice Lake. Quinn previously served in the housing committee in the state assembly and also is a Realtor by trade. Quinn was a multiple time winner of the Friend of Housing award while in the state assembly and we are looking forward to working with him as the new chair of the housing committee. With a move to assembly leadership Representative Rob Summerfield was no longer eligible to be a committee chair per assembly republican rules. Replacing Summerfield as chair is State Representative Rob Brooks of Saukville. Brooks has been a longtime member of the committee and has authored several housing reform bills that have been supported by WBA; in fact we have been meeting over the summer and fall on a consensus package of housing reforms to be introduced next session. We look forward to working with Senator Quinn and Representative Brooks in 2023-2024. Shovel Ready Workforce Housing Site Bill Likely to be Reintroduced Last session, WBA supported the passage of Senate Bill 629 (SB 629)which would have allowed municipalities to create shovel ready workforce housing sites that would be certified by the Wisconsin Economic Development Corporation. SB 629 also contained an amendment supported by WBA to require a needs assessment to be shared with a developer to show the costs related to sewer and water utility charges. After receiving bipartisan support in both the state assembly and state senate, SB 629 was ultimately vetoed by Governor Tony Evers. In the veto message of SB 629 Evers stated “I am vetoing this bill in its entirety because I object to implementing a program that may detract from existing economic development efforts. While the bill is aimed at improving the availability of workforce housing in the state, it does not ensure that a shovel-ready site would address a particular or even generalized workforce housing need anywhere in the state.” Working with democrats in the legislature who supported this bill and the bill authors we hope to address Governor Evers’ concerns with the bill in hopes of getting his signature so the bill can become law next session. From NAHB: U.S. Enters a Macroeconomic Maze in 2023 NAHB Chief Economist Robert Dietz recently provided the following housing industry overview in the bi-weekly e-newsletter Eye on the Economy. Downshifting its pace of tightening of monetary policy, the Federal Reserve raised the federal funds target rate by 50 basis points, increasing that target to an upper bound of 4.5%. This marked a relatively smaller increase after four consecutive 75 basis point hikes. The Fed is likely to continue raising rates (50 to 75 basis points) in 2023, moving mortgage rates higher than they are today. However, the end of the rate tightening cycle now appears to be in view. That said, the Fed will maintain these newly set elevated rates for the remainder of 2023. Then it is likely to begin easing in 2024, but no sooner than that. This means mortgage rates are likely to move higher from today's 6.4% range before peaking in mid-2023, then ultimately fall back and lead to a housing rebound for 2024. The Fed's downshift comes after inflation data showed some slowing. During the past 12 months, the CPI rose by 7.1% in November, following a 7.7% increase in October. The "core" CPI increased by 6.0% over the past 12 months, following a 6.3% increase in October. This moves the data in the right direction but is still far from the Fed's rough 2% target. Indeed, the food index rose by 10.6% and the energy index climbed by 13.1% over the past 12 months. So, while the rate of growth for inflation is slowing, elevated year-over-year growth rates combined with ongoing tight labor market conditions mean the Fed will continue to raise rates. Total nonfarm payroll employment increased by 263,000 in November, following a gain of 284,000 in October. Although a cooler labor market will help ease inflation, it will also hinder housing demand. This is the macroeconomic maze that must be navigated in 2023. The economy will be slowing, but the Fed will maintain higher interest rates until it can see firm evidence of sustained declines for inflation. This means that the first half of the year will be tough for housing demand. But as the easing cycle comes into view — perhaps with the assistance of a mild recession — rates will fall back on a sustained basis and the housing market will rebound.
NAHB Connect Brings the Industry Together
NAHB Responds to Rule on Independent Contractors The U.S. Department of Labor recently published a proposed rule updating the test for determining whether a worker is an employee under the Fair Labor Standards Act (FLSA) or an independent contractor. NAHB has submitted formal comments opposing the proposed rule. The language of the new test introduces new, undefined, vague terminology that would reclassify legitimate independent contractors into employees, affecting many industries, including residential construction that rely on the subcontractor business model.
In an industry where work often stays close to home, connecting with peers across the country can help jumpstart your business and add value to what you do every day. NAHB Connect is a free online platform that helps connect NAHB members with one another for discussions, learning, the sharing of ideas and more. Members on the NAHB Connect platform engage in discussions on a wide variety of topics. Whether it’s permitting challenges at the local level or comparing and contrasting different building techniques or materials, there’s always someone on the platform willing to provide their insight, experience and assistance to help a fellow member. Popular discussion topics in 2022 included adapting to the “new normal” of the economy, supply chain challenges, marketing strategies and trade show booth ideas. Not only do NAHB Connect members connect with one another in conversation, but Ask Me Anything events (AMAs) also feature guest experts who are ready and available to answer any question posed by the virtual audience. f you’re not yet a member of NAHB Connect, you can create your profile today at connect.nahb.org. Use the same credentials you use to sign in to nahb.org.
Looking at the 2023 Economic Outlook Where is the housing industry heading in 2023? NAHB Chief Economist Robert Dietz recently discussed key data to help answer that question during a webinar with Pro Builder Editorial Director Rich Binsacca. The webinar provided an overview of the impact of interest rate hikes, supply chain issues, and rising labor and materials costs on residential construction. A summary document with key highlights is also available to download.
Funding Bill Gives More to HUD Congress has approved a $1.72 trillion spending bill that will fund the government through fiscal 2023, which ends on Sept. 30, 2023. Of note to the housing community, the measure includes a total of $58.2 billion for the U.S. Department of Housing and Urban Development, an increase of $4.5 billion above fiscal year 2022. The HUD funding includes $85 million for a new "Yes In My Backyard" (YIMBY) grant program championed by NAHB that will incentivize affordable housing production. The new grant program rewards state and local jurisdictions advancing policies that increase the supply of affordable housing.
Strong Job Growth, Year-Over-Year Construction sector jobs in the United States increased by 248,000, year over year — a 3.3% increase compared to November 2021. California added 37,200 jobs, which was the largest gain of any state, while South Carolina lost 4,700 construction sector jobs. In percentage terms, North Dakota had the highest annual growth rate in the construction sector by 15.6%. Over this period, South Carolina reported a decline of 4.5%. Year over year ending in November, 4.9 million total jobs have been added, marking a more than full recovery of the labor market from the COVID-19 pandemic-induced recession.
Materials Prices Eased in November The prices of building materials decreased 0.3% in November (not seasonally adjusted) following 0.5% and 0.1% declines in September and October, respectively, according to the latest Producer Price Index (PPI) report. The index has decreased five of six months for the first time since 2015. The PPI for goods inputs to residential construction, including energy, fell 0.8% in November. The index was led lower by a 5.3% drop in energy input prices as the PPIs of regular unleaded gasoline and No. 2 diesel fuel decreased 6.7% and 4.5%, respectively.