Tight Lending Practices Hamper Housing Market

Washington, DC, Jan. 9, 2012 -- The National Association of Home Builders said it agrees with a finding by the Federal Reserve that tight mortgage lending standards are holding back a housing and economic recovery.

"The Federal Reserve's report to Congress confirms what we have been saying for some time: That extraordinarily tight credit conditions are preventing creditworthy borrowers from obtaining home loans and this is harming the housing market and the broader economy," said Bob Nielsen, chairman, NAHB.

Nielsen noted that the lack of credit extends to housing construction loans as well, which is crippling the housing industry and preventing construction of new homes in markets that need and want them.

"In scores of markets across the country that are exhibiting signs of job growth and where the inventory of new homes is nearly exhausted, builders should be hiring workers to break ground on new housing developments," he said.

In its message to Congress, the Fed said that "restoring the health of the housing market is a necessary part of a broader strategy for economic recovery."

In normal times, housing accounts for more than 17 percent of the nation's economic output. Constructing 100 new homes creates more than 300 full-time jobs, $23.1 million in wage and business income and $8.9 million in federal, state and local tax revenue.