The leader of organized home building yesterday urged immediate relief from the federal reserve's high-interest, anti-inflation actions to revive the nation's new and resale housing markets that have been choked in recent weeks by mounting mortgage rates.
"Our housing economic conference brought out a lot of views about the plight of housing," Vondal Gravlee, president of the sponsoring National Association of Home Builders, said later in an interview. "And I am more convinced than ever that the Fed must reverse, or at least strongly modify, its actions that have sent interest rates into the sky."
Gravlee's summary of a two-day meeting to discuss the mortgage turmoil that virtually has paralyzed normal buying and selling included a charge that the back of the economy is being broken, "with the housing industry leading the way."
Conceding that the housing downturn had begun before the Fed's monetary actions were taken Oct. 6, Gravlee said that many of the 20 speakers and participants in the conference agreed that the high-interest-rate approach is "an extremely painful way to fight inflation. He also said it will lead to a "much deeper recession and a prolonged housing slump."
Sen. Lloyd Bentsen (D-Tex.) offered tax incentives for savings as one antidote to housing finance problems. Bentsen said he needs more support for his bill which would exempt the first 500 of savings from income taxes.
"Both Germany and Japan offer even better incentives to savers to provide money for opportunity," he added.
Bentsen agreed with Sen. Harrison Williams (D-N.J.), chairman of the Senate subcommittee on housing, that the Federal Reserve policy has caused "staggering increases in the cost of homes."
Williams said he plans to hold hearings on housing's problems during which a revival of a 1974 emergency program to provide below-market rate loans for housing is likely to be considered seriously.
Gravlee endorsed that program, in which the government pays the difference between market rate and whatever lower rate is set to attract moderate income buyers.