US builders: straining for glimpse of recession's end

Light at the end of this recession's tunnel still seems far away and dim to the millions of Americans who build the homes in which the rest of us live.

Consider the following facts, ticked off by Michael Sumichrast, chief economist of the National Association of Home Builders, and other experts:

* Housing starts in 1981 - at 1,101,400 - were the lowest for any year since 1946.

* Unemployment in the construction industry is skyrocketing. On Monday AFL-CIO president Lane Kirkland told a legislative conference of the AFL-CIO Building and Construction Trades Department here that the jobless rate in the construction industry stood at 17.9 percent in March, compared with 14.7 percent in March 1981. The March 1982 unemployment rate for the nation as a whole stood at 9.0 percent last month.

* Home builders are going out of business in droves. The failure rate for the first seven and a half months of 1981 (the latest figures available) was up 40.8 percent over the same period of 1980.

* Almost 85 percent of the nation's savings and loan associations--the chief source of mortgage money--lost money in the second half of 1981, according to the Federal Home Loan Bank Board (FHLBB). This was more than double the proportion of S&Ls reporting losses in the same period of 1980.

Losses chalked up by the S&L industry in the July-December period of 1981 totaled a record $3.1 billion. Taking 1981 as a whole, say board officials, the nation's S&Ls lost $4.6 billion. Some officials say this year's red ink might total $6 billion.

All this spells depression, not recession, so far as the housing industry is concerned, according to some homebuilders. Jobless rates in the construction industry today are higher than the nation's total unemployment rate during some years of the Great Depression.

In 1936, for example, the US jobless rate averaged 16.9 percent and fell to 14.3 in 1937--well below the level of unemployment in the housing industry now.

In February of this year housing starts rose slightly to a 953,000 yearly rate. But all the gains, notes Dr. Edward Yardeni, chief economist of E.F. Hutton & Co., Inc. were in multi-unit buildings. Single-family starts in February tumbled 11 percent.

This, says Dr. Yardeni, was the seventh consecutive month in which total housing starts fell below an annual rate of 1 million - ''more than double the number of months of the longest period of starts below this level since the Census Bureau began measuring housing construction activity in 1959.''

Housing, along with autos, normally leads the nation's economy out of recession into recovery. Such was the case in previous recessions since World War II.

People tend to save more during hard times and the nation's savings and loan associations typically got their share of these extra savings.

When a recession ended, the S&Ls had money to lend. Not this time around, says Dr. Sumichrast. ''No longer do we have the luxury of money (from the S&Ls) pushing builders'' into new activity.

Why? The proliferation of money market funds and other high-yield savings instruments drained off much money that might otherwise have gone to the S&Ls.

The thrift industry--S&Ls and mutual banks--is itself one of the most troubled industries in the US, with as many as 1,000 S&Ls facing possible merger or otherwise requiring outside help.

President Reagan opposes a full-scale federal bailout for either S&Ls or housing, arguing that his economic program is the best way to bring down interest rates.

Mortgage lenders across the US now charge 16 to 17 percent interest on their home ownership loans. Interest rates, says Dr. Sumichrast, would have to come down to 12 or 12.5 percent to spark a true recovery in housing.

With interest rates at their present level, says a commentary by Manufacturers Hanover Trust Company, ''approximately 85 percent of all households are now unable to afford the mortgage associated with the median-priced new home.

''This compares with the exclusion of only 40 percent of all households from the new home market at the end of the 1973-75 recession.''

For different reasons, in other words, everyone connected with housing--banks that lend money, builders who borrow, and families wanting homes--are stymied by the refusal of interest rates to climb down.

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