Statement About the Housing Crisis and the Economy

YESTERDAY I met with Secretary Romney, Louis Barba, ¹ and officials of the National Association of Home Builders to discuss the crisis situation we are facing in the housing of our people. The continuing decline in housing production, the outflow of funds from savings institutions supporting the housing market, and the drying up of traditional mortgage sources are contributing to a serious housing shortage which is of grave concern to our national well-being.

¹ President, National Association of Home Builders.

Housing and the industry which provides it are bearing a disproportionate burden of both current inflationary pressures and the anti-inflation measures instituted to restore price stability. As a result, a major national resource--the productive capability of our private home-building industry to meet our national housing needs--is being greatly threatened.

The decline in housing production must and will be stopped. The private sector and all levels of government must take the steps necessary to assure that the Nation's housing needs are more fully met now.

There are no easy answers to the housing problem, and a full solution will require time. Extraordinary and unprecedented steps have already been taken. These include extensive direct support to the mortgage market through the Federal National Mortgage Association and the Federal Home Loan Bank Board. In addition, the Department of Housing and Urban Development has authorized issuance of mortgage-backed securities fully guaranteed by the Government and has released $ 1,150 million of funds to provide special assistance in the financing of housing production for low- and moderate income families.

The need now is to go beyond these steps--to change basic attitudes and reexamine old patterns of activity--so that we can reach more quickly the full solution we seek.

The first step is for all sectors of our economy--business, labor, consumers, and all levels of government--to be fully aware of the nature of this crisis, and for each of them to address itself vigorously within its sphere of responsibility toward adequate solutions. The need to regain early control over inflation is paramount, and voluntary steps to restrain unnecessary spending can play a vital role. In this connection, I have firmly committed the Federal Government to do its part.

In order to maintain a surplus in the budget, I have cut Federal spending to the minimum possible levels this year and next. Some needed Federal programs simply will have to be postponed, so that we live within our means. This will help free resources for housing.

I urge the private sector to follow this example by also postponing avoidable expenditures and increasing savings.

Some time ago I cautioned business and labor against continuing to base price and wage decisions on the expectation of continued inflation. Those who do are bound to lose. The sooner this is realized the better off they--and the Nation as a whole---will be.

Lack of mortgage money is perhaps one of the most pressing immediate restraints on housing. Needed housing must and will be financed and built. All financial institutions--commercial banks, mutual savings banks, savings and loan associations, life insurance companies, pension funds, and trust funds--should recognize the investment opportunities that will exist in this field over the years ahead. They should seek now to move affirmatively into a better position to capitalize on these opportunities.

I pledge that this administration will take every possible step to solve this most serious housing problem consistent with the overriding need to contain inflation. The housing of our people is and must be a top national priority.