President Carter's program for voluntary wage-price guidelines may encounter difficulty in the nation's new housing market because of the fast-rising prices of land and key materials.
Mr. Carter noted in his anti-inflation message that problems related to the high costs of building and financing houses "cannot be solved easily by a voluntary price and wage restraint.
"The most effective way to moder the rise in homeownership costs is to bring the general inflation under control," he said Tuesday.
Ernest A. Becker, president of the National Association of Home Builders, urged support of the Carter anti-inflation program by home builders. He said, "The nation must act to cool inflationary expectations and reduce the underlying inflation rate of 7 percent."
Nationally, the median price of new homes increased 13.2 percent annually in two recent years. The Carter plan prescribes that future price increases be held to 1/2 percent below the average of the previous two years. But even the maximum increase ceiling for highly inflationary businesses and industries is listed at 9 1/2 percent in the Carter program.
Becker said that "with the support of the business community and organized labor, coupled with a reduction in federal spending and regulatory reform, I believe the guidelines can work." But in regard to home builders holding any increases to the prescribed 9 1/2 percent, he added: "This will be extremely difficult to accomplish in many metropolitan areas where land available or suitable for development is in short supply."
He pointed out that the cost of a developed lot now accounts for 25 percent of the sales price of a new house and that material, labor and financing costs also have been increasing at a high pace.
Speaking as president of the metropolitan Washington chapter of the home builders association, Kettler Brothers executive Charles Phillips said that holding price increases to a 13 percent level in this area "would be a hardship if all costs continue to rise as they have been doing in recent months." Phillips cited recent increases in the prime lending rate of banks and said that costs of construction that have been rising more than 3/4 percent a month.
Figures compiled by the Federal Home Loan Bank Board on sales of new houses sold here this year show that average prices increased 13 percent from $67,900 in January to $78,000 at the end of September. Although price increases vary from subdivision to subdivision, often depending on sales volume, most new home prices have been moving upwards at the rate of nearly 15 percent annually in the last two years. The market in 1977 and 1978 has been unusually active here, both in new and resale houses.
One hopeful sign for holding down new-home prices was seen by a seasoned housing industry observer. He said that a slight slackening in buyer interest and the rising mortgage interest rates might take some of the unusual heat out of the area marketplace and thus cause builders to use restraint in future price increases. Most area builders, however, anticipate a slight decline in their production next year.