The head of the nation's homebuilders warned the administration this week that the country is "heading into the greatest housing depression ever."
But Merrill Butler, president of the 100,000-member National Association of Home Builders, said after a visit to the White House that his organization had come away with "no good news." About 1,400 NAHB members assembled here this week to lobby Congress and the administration.
Some of the builders wore hard hats, down-filled jackets and heavy boots as they visited government offices too. They told members of Congress that the housing industry is in a totally stagnant position as the result of record-high mortgage rates, which are discouraging buyers. The builders said they are also being hurt by constantly escalating construction loan rates.
Butler told his members that the White House is sympathetic to the problems but is unwilling to make a commitment to back any actions that would cost money, such as subsidizing mortgage loans on new houses or providing tax breaks for persons buying new houses now. A tax break program for buyers was used during the housing recession in 1974-75.
At a meeting at the Capital Hilton, one Chicago Builder, Bruno Pasquinello, drew cheers when, citing the federal bailout of the ailing Chrysler Corp., he suggested that the government aid builders by instituting a moratorium on all interest payments until the housing crisis is over.
On the Hill, builders urged reactivation of the so-called Brooke-Cranston program to provide federally subsidized mortgages at below-market rates for buyers unable to qualify for high-priced loans.
At a hearing before the Senate committee on small business, which was looking at the impact of inflation on the housing industry, Neil Haselwander of Eu Claire, Wisc., said that home building in his area is at a standstill and that most builders are now seeking renovation and maintenance work to keep busy. He said that home building is off 90 percent this year and that only one permit for a new house has been issued in his area thus far in 1980.
Committee Chairman Gaylor Nelson agreed that housing should not be forced into a recession.
"If we destroy the housing industry, housing prices will go through the roof when the industry, decimated by high interest rates, is called upon to meet the pent-up demand," Nelson added.
Committee member Lowell Weicker (R-Conn.) said that the administration's anti-inflation policies will lead to a "potentially horrendous housing shortage."
NAHB president Butler said that the depressed housing market could worsen and leave 1.6 million construction workers without jobs. He warned the Senate committee that "our inability to produce housing to meet the demands of the American people could upset the social fabric of our country."
Meanwhile, the U.S. League of Savings Association reported that mortgage loan delinquencies dropped to 0.77 in February, slightly below the January rate and the second lowest ratio in February since the league began collecting date in 1953.
League executive vice president William B. O'Conell said that the low level of mortgage delinquencies indicated that, "despite economic hard times, American homeowners continue to give high priority to protecting their housing investments."
A mortgage is considered delinquent if payment has not been made within 60 days. All types of mortgage loans -- conventional, FHA and VA -- are included in the ratio of those made by more than 1,111 S&Ls.