'We are part of the American dream'

COEUR d’ALENE — The American dream of home ownership still lives, said Jim Tobin, CEO of the National Association of Home Builders.

The solution is in one way, simple.

“We have to start by building more houses,” he said to about 200 people at the Housing and Economic Summit hosted by North Idaho Building Contractors Association at Hagadone Event Center on Wednesday.

But it's not quite that easy.

Lake Coulson, NAHB chief lobbyist, said there are two big obstacles to overcome before meeting President Joe Biden’s stated goal in his State of the Union Address of building 2 million affordable homes.

One is government regulations that are making it more expensive and prohibitive for builders. Another is that there are 274,000 open construction jobs nationwide.

“We are desperate for workers in the construction industry,” Coulson said.

The impact is obvious, Tobin said. Home prices remain high, blue-collar workers can’t afford them and so people are moving to wherever it’s cheaper to live — which is becoming harder to find.

“That happens in so many different areas across the country,” Tobin said. 

But he is confident of seeing a renaissance in home construction and believes the housing industry is at a pivotal moment in its history. He said builders must not retreat from their role because their country needs them.

“We are part of the American Dream and if you’re not on that team, then we don’t need you,” Tobin said.

He agreed with Coulson that lack of skilled labor is a huge problem.

“It’s not interest rates, it’s not supply chain.” he said.

Tobin expects interest rates will remain “stubbornly high” in 2024 and into 2025, but then, he believes rates will dip under 6% and fuel home construction and buying.

“The spigot that we saw two years ago is going to turn back on and are we ready for it?" he asked.

Tobin told builders to talk to their elected leaders and remind them the housing industry can be sustainable, people can still own a home, with lower interest rates, less red tape and a trained workforce.

“We need to fix those things," he said.

Dr. Robert Dietz, NAHB chief economist, said higher interest rates make it more expensive for builders to finance their projects, which drives up the cost of housing.

"We're just going to have to be patient. We’re going to have to see two or three more beneficial inflation reports," he said.

Overall Inflation is about 3%, just above the Fed goal of 2%, but he said “shelter inflation, which refers to rent and home ownership, remains above 5% and is discouraging people from buying and renting, as they are the primary costs that eat up income.

“Shelter inflation is the last leg of the inflation fight in the United States,” he said.

He said the economy is slowing down. Credit card debt is up 30% in the last 18 months, people are using more of their savings, and job openings fell to 8.5 million in March, down from 12 million in 2022.

Deitz pushed back his expectations for rate cuts to one this summer, but another six in 2025.

“This is not cancellation, it’s a delay,” he said.

Deitz echoed Tobin and predicted mortgage rates will dip below 6% next year, perhaps around 5.5%.

“We’re not going down to 4, let alone 3 or 2%," he said. "You need to educate your customers on that."

    Jim Tobin, CEO, National Association of Home Builders, gives a talk on Wednesday in Coeur d'Alene.
  

    Lake Coulson, National Association of Home Builders chief lobbyist, gives a talk on Wednesday at the Housing and Economic Summit at the Hagadone Event Center hosted by North Idaho Building Contractors Association.