The home-building industry is being "driven out of the marketplace by the actions of its own government," the president of the National Association of Home Builders charged here today.
"This industry is in very serious jeopardy," said Merrill Butler, an Irvine, Calif., builder who is winding up a year as NAHB president. "It's programs are in a state of decline, and our sales are failing to materialize because of continuing high interest rates . . . . We are no longer as an indstury able to properly plan for the future."
While bitter about government policies of recent years, Butler told reporters at the first day of his association's national convention here that the housing industry can expect "many, many good things" from the Reagan administration in terms of action to reduce interest rates, budget balancing and lessening of government regulation.
"We are in trouble today because interest rates are so high, due to the action, or almost inaction, of the federal government" in the past, he said.
As of last spring, nearly a third of the NAHB's member builders had gone out of business, Butler said, not necessarily because they had failed financially but because they were not willing to take risks, to "drift with whatever economic winds the government blew."
The home-builders group expects housing starts to increase by 5 percent to 6 percent this year to between 1.4 million and 1.7 million, falling short of the 2 million new units it believes are needed to meet demands.
Members of an "economic roundtable" group of mortgage finance specialists assembled by the builders told reporters that, while they expect mortgage rates to decline this year, the situation remains volatile. And while the 30-year, fixed-rate mortgage "might not be dead forever," it will be difficult to obtain in the next two years, except for FHA-VA-backed loans that can be sold in the secondary market, said Lewis Teel, senior vice president of the Bank of America.
If any mortgage interest rate emerges as the new realistic minimum, it will be 13 percent, several points below the current going rate, the panel members said. But consumers are going to have to "get used to the idea that this rate will fluctuate with the market," said Gilbert Roessner, chairman of City Federal Savings and Loan Association of Elizabeth, N.J.
"It will take a while until everybody shakes down to acceptance and to a uniform way of delivering the product," he said, referring to the myriad of new types of short-term and variable-rate mortgages being developed to replace conventional loans.
Not enough fixed-rate loans are being written "to support 1 1/2 million housing units" being built, said Douglas Hall, vice president of Continental Illinois National Bank and Trust Co. He said he believes federal legislation this year will allow all financial institutions to operate under the same set of rules for the new types of mortgages.