The National Association of Home Builders trekked up Capitol Hill Wednesday and delivered a message that might just as well come from the national assocation of medical doctors: First, do no harm.

In testimony before the Senate Banking Committee, David Crowe, the NAHB' s chief economist, warned senators against making changes to the current housing finance system without first devising a clear and practical alternative. He also argued for retention of housing-related tax deductions and made a plea for Congress to act to ease the shortage of money banks are making available for acquistion, construction and development (AD&C) loans.

"Without access to credit, the residential construction industry will lose more small businesses and experience more job losses, with these impacts being widely spread across the nation," said Crowe. "When you consider the enormity of the total number of jobs attached to housing, a sector that accounts for 15 percent of our nation's GDP, now is hardly the time to step back from our nation's long-standing commitment to homeownership."

To that end, Crowe urged lawmakers to:

*Agree to "definite solutions" on the future of Fannie Mae and Freddie Mac that "ensure a stable, reliable and affordable supply of credit to home buyers and a liquid secondary mortgage market."

*Preserve the mortgage interest deduction, the capital-gain exclusion, the real estate tax deduction and the Low Income Housing Tax Credit (LIHTC). On that count, he said that if eliminated or weakened, these policies would result in wealth losses for home owners, lower home values, rising foreclosures, a diminished local tax base for many communities, and in the case of the LIHTC, an abandonment of a successful policy that facilitates the production affordable housing.

*Compel federal regulators to enact a broad-based definition of a Qualified Residential Mortgage (QRM) that would be exempt from the risk retention rules under the Dodd-Frank financial reform law. According to NAHB, "An overly restrictive QRM definition would drive numerous lenders from the current residential mortgage market and could result in excessive downpayment requirements of 20% or more, which would squeeze first-time home buyers out of the market for years to come, preventing household formations and producing economic damage to the overall economy.

*Work to restore (AD&C) lending to permit home builders to contribute to the economy where and when housing demand emerges as the economy improves, he added.

Crowe said more than 1.4 million residential construction jobs have been lost since April 2006. "NAHB estimates that the construction of each single-family home creates three jobs; $90,000 in federal, state and local tax revenue; $145,000 in wage income; and $86,000 in net business income," he said.

NAHB expects new-home sales to rise 8% to 347,000 units in 2011 followed by a more substantial increase of 49% next year to 516,000 units. It expects single-family housing starts to follow a similar trend to home sales, with an increase of 15% this year and 47% in 2012, which will raise the pace of single-family starts to 900,000 units by the end of next year. While a significant boost over current depressed levels, Crowe said this is still 40% below NAHB's estimate of the long-term sustainable trend, based on demographics, replacement needs and second-home demand. Multifamily starts are projected to increase 21% in 2011 and 40% in 2012, rising to 210,000 units in the fourth quarter of next year, still 38% below NAHB's estimate for long-term sustainable growth.