| “If you look at Federal Reserve estimates of debt service for home owners, it is about where it was in the mid-1960s,” said Glassman. “There is nothing going on to suggest that home prices are straining or getting out there. We’re seeing that when we do better, when incomes are up and when it’s cheaper to finance, people want more housing.” In answer to fears that a housing price bubble might emerge when interest rates do eventually begin rising, Glassman said that interest rates won’t start climbing until the economy is doing better and creating more jobs, and that in itself will offset the drag of a Fed interest rate hike. “A large portion of mortgages outstanding are locked in at fixed rates, so people are pretty well protected,” he added, "and it won’t do much to hurt the housing sector.” NAHB Chief Economist David Seiders predicted that there will be some upward momentum in mortgage rates over the year, but those rates “so far are a surprise on the downside,” he said, with 30-year, fixed-rate mortgages averaging below 5.4% in Freddie Mac’s most recent weekly survey. Seiders said that mortgage rates should average 5.6% in the current quarter and rise to 6.1% by the final quarter of the year. He had previously expected the Fed to move up its federal funds rate just after the November elections, but he now thinks that is more likely to happen next January. Although the average seasonally adjusted annual rate of single-family home sales in January and February is now “a little bit” above the average of the “dynamic” fourth quarter of 2003, Seiders said he expects both starts and sales activity to decline by about 2% this year and home prices to grow by about 5%. While house price appreciation has been good news for the nation’s home owners and the economy, which has benefited significantly from record levels of home refinancings, “it has made the burden even higher” for municipal employees and others who can’t afford to live in the communities where they work,” said David Crowe, NAHB’s senior vice president of federal regulatory and housing policy. The downpayment hurdle and local regulatory barriers are two of the most formidable obstacles to affordably priced “workforce” housing, Crowe said. “And people who already own a home feel compelled to draw a fence around their community or neighborhood” and through impact fees, minimum lot sizes and “gold-plated” infrastructure exclude the production of housing that working people can afford. Among the solutions, Crowe said, are: a homeownership tax credit that has been in the Administration’s budget for the past few years, no-downpayment loans insured by the Federal Housing Administration and “barrier removal efforts at the local level to make planners and zoning and government officials understand the link between imposing these barriers and the effect it has on employees of their cites.” To Listen to the NAHB Teleconference: 1) Dial the Chorus Call digital playback system at “Toll Free 877-344-7529” or 412-858-1440. 2) Please enter ‘ 527 ’ when prompted for your account number followed by the # sign. 3) Please press ‘ 1 ’ to play a recorded conference. 4) Please enter ‘ 340660 ’ when prompted to enter the conference number followed by the # sign. 5) Please clearly state your name and company name when prompted to do so followed by any key. 6) Please press ‘ 1 ’ to begin the conference playback*. *Note:You may press ‘ 0 ’ at anytime during the conference to hear the Detailed Instructions Menu.You may press ‘ 2 ’ at anytime during the conference to stop playback entirely.You will be placed in the Introduction Menu. | 
