The Federal Reserve's decision to cut short-term interest rates today by half a percentage point is another step in the right direction to shore up a weakening economy, according to the nation's home builders.
"We urge Fed policymakers to monitor events closely and be prepared to enact further cuts in the future," said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from El Segundo, Calif.
In addition to the interest rate cuts, Catalde called on Congress to do its part on the fiscal front by moving quickly to pass an economic stimulus package. He urged lawmakers to craft a final plan that:
- Raises the Fannie Mae/Freddie Mac conforming loan limit for two years instead of one and links this change to reform of the housing government-sponsored enterprises. This will increase the availability of mortgage money in high-cost markets.
- Extends the carryback of net operating losses for five years to enable struggling businesses to avoid lay-offs and maintain their viability by providing a much-needed infusion of capital to prevent the liquidation of assets.
- Allows cities and states to issue tax-exempt mortgage bonds to refinance existing loans to help troubled borrowers.
"These provisions are vital to help the housing sector rebound and provide a shot in the arm to the sluggish economy," said Catalde. "They will save jobs; help businesses in distress; ease the mortgage credit crunch, which is especially pronounced in high-priced metro markets; boost housing demand; and aid distressed home owners."
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ABOUT NAHB: The National Association of Home Builders is a Washington-based trade association representing more than 235,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. Known as "the voice of the housing industry," NAHB is affiliated with more than 800 state and local home builders associations around the country. NAHB's builder members will construct 80 percent of the more than 1.08 million new housing units projected for 2008.
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