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Focus on Home Builders: News from NAHB’s Fall Board Meeting

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RubinBrown recently attended the National Association of Home Builders (NAHB) Fall Board meeting as a member of the Business Management and Information Technology Committee held in Dallas. Some of our observations are highlighted.
October 1, 2015

RubinBrown recently attended the National Association of Home Builders (NAHB) Fall Board meeting as a member of the Business Management and Information Technology Committee held in Dallas. Here are some of our observations:

State of the Industry

  • The recovery of the Home Building Industry continues to move forward. Starts are now over 68% of pre-recession levels with the remainder of 2016 and 2017 forecasted to be strong. The creation of new jobs is a strong driver of the increase. In fact, 2017 should mark the return to what has been determined as the new “normal.”

  • The Housing Market Index (HMI) is now at a 10 year high at 62%. HMI is a measure of builder sentiment regarding new single-family homes including traffic currently and for the next six months.

  • Even with an expected increase in mortgage rates over the next year, the industry and economy are expected to grow at near pre-recession levels.

  • The shortage of skilled labor is a huge issue EVERYWHERE. Carpenters (rough), framers, carpenters (finished), and bricklayers/masonries are the trades experiencing the greatest problem to “keep up.” There is a lot of concern how the industry will be able to handle expected future demand as fewer people continue to the trades.

Tax Reform and Extenders

  • With the campaign in full stream now, there is a lot of discussion about tax reform. Nothing is expected to happen until the next election, but all the candidates seem to be offering various plans for reform. NAHB is poised to protect the mortgage interest and real estate tax deduction along with the current limits on the gain on sale of residence. With many of the candidates looking to lower the corporate rate among other things, there will be plenty of talk about limiting these tax advantages benefits of home ownership.

  • As what occurred last year, NAHB expects Congress to further extend the Section 179 and bonus deprecation provisions – this time for two years. It is not likely Congress will act on these until early December.

The Election

  • NAHB is looking to raise $3M through its Build Pac just for the upcoming election cycle. They have raised $900,000 to date.

  • NAHB is exploring the idea of a candidate forum at the International Business Show (IBS) in Las Vegas. With nearly 100,000 people in attendance, the event is gaining a lot of interest.

Finally, NAHB recently released a white paper on “Why Housing Matters – A Comprehensive Framework for Housing System Reform.” It provides some very interesting reading on the housing finance system.

 

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

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