Home Builders chairman: Home starts still have a 'long way to go'

National Association of Home Builders Chairman Ed Brady.

Home construction is up nationally, but it's still only at about half the level of a normal, healthy market, the chairman of the National Association of Home Builders said Tuesday in Chattanooga.

"We've got a long way to go," said NAHB Chairman Ed Brady, a homebuilder and developer from Bloomington, Ill. "Obviously, homebuilding is better. It's not great."

The national rate mimics the local market of single-family home starts almost exactly, said Jay Bell, owner of Bell Development in Chattanooga.

"It's still not nearly back to what we need to be building," said Bell.

Brady, who met with local builders and developers while in the city, said the national marketplace is "very tentative, tenuous" despite historic low interest rates.

"We're hitting a lot of headwinds as an industry," he told Chattanooga Times Free Press reporters and editors in a meeting.

A lot of the challenge for builders is regulation, Brady said, adding that almost 25 percent of the average home price is due to government regulations.

"We've got to be careful not to overdo it so our industry can't provide product," he said.

Brady said overtime rules for workers, wetlands regulations proposed by EPA and local zoning and stormwater limitations raise the price of developing property and building houses.

Brady said there's "a real risk" of constraining growth due to regulations.

"You risk not being able to provide single-family home ownership at an affordable price," the NAHB chairman said. "I throw up a red flag in that regard. All communities should be careful not to over-regulate to where they stifle growth."

Bell said there needs to be a re-evaluation of "onerous regulation" that's hampering new development.

"We've priced out an entire segment of our population," he said. Bell said regulations and codes have increased home costs so much that many people can't afford to buy and must live in apartments.

Bell said, for example, that there are few new homes offered in Hamilton County below $250,000.

"Long-term, this isn't a good thing," he said. "We've got to figure out how to bring affordable homes in the market.

Brady said providing affordable housing is at a crisis level in America.

"Supply is the problem," he said.

Also, Brady said that there's a shortage of skilled labor in the homebuilding industry nationally.

"During the recession, so many people left the industry and haven't come back," he said. "I'm afraid it's going to get worse before it gets better."

Brady said the average age of a master plumber is more than 58 years old, he said.

Bell said the skilled labor shortage is acute in Hamilton County as well.

"We're faced with shortages, serious shortages," he said. "We can't find people skilled in plumbing, electrical work, carpentry, heating and air."

Concerning the presidential election, Brady said NAHM doesn't make an endorsement. But he said the association has talked with both campaigns about small business regulatory burdens and received "a good response" from each.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.