The country’s largest home builders have decided to establish a new trade association separate from the National Association of Home Builders.

Called the Leading Builders of America, the new organization said in a statement that it is “working to ensure that the housing sector continues the process of stabilization and recovery.  The group also plans to be active on energy efficiency legislation and other issues of importance to home buyers and the home building industry. “

It was chartered in October as a 501(c)6 or business group, according to Ken Gear, who will lead the group. He is a former vice president for government relations at Pulte. Clayton Traylor, previously director of government and industry relations for the former Centex Corp., will also be involved in the new association.

According to a story in the Capitol Hill newspaper Roll Call, the Leading Builders of America counts 16 major builders as its members. Those include Pulte, Meritage, David Weekley Homes, the Drees Company, Hovnanian Enterprises, Lennar, M/I Homes, MDC, Ryland Homes, Shea Homes, Beazer Homes USA, KB Home, Taylor Morrison, Toll Brothers, Weyerhaeuser Realty Co., and others, according to news reports.

The group would not discuss the dues structure for funding the new association.

While Leading Builders of America (LBA) members also plan to maintain their NAHB memberships, according to the group’s statement, the move does effectively dissolve what had been an NAHB specialty group for large home building companies. “There will be no formal High Production Builders Council under our umbrella at this time,” NAHB Chairman Joe Robson told BUILDER in an email Tuesday. “However, they will remain members of NAHB and the state and local home builders association.”

Despite the dual membership for these companies, however, the establishment of Leading Builders indicates the level of friction between the NAHB, whose membership is primarily composed of smaller builders, and the large public builders, who often have a competitive advantage due to their size and access to capital.

The two groups clashed earlier this year over a bill that would have extended the time frame for companies to carry back net operating losses, and hence allowing companies to receive a tax refund and receive some valuable cash. Public builders supported the carryback provision; the NAHB supported it, but had questions about the impact of it on smaller builders. A letter sent by NAHB CEO Jerry Howard to Speaker of the House Nancy Pelosi raising concerns about the carryback inspired particular wrath among the large builders, who felt they were being inappropriately targeted by Howard.

That letter, said one big builder executive who declined to be identified, was “unbelievable.” Soon after, executives from several large home building companies “reportedly met with NAHB leadership to discuss Mr. Howard’s possible ouster,” according to a story in the Wall Street Journal.

Would the big builders have stayed under the NAHB’s big tent if Howard had been forced to resign or fired? The Leading Builders sidestepped this question in an email to Gear, who responded: “Our goal is to work cooperatively with NAHB’s senior staff and volunteer leadership and we communicate with them regularly.”

For the NAHB’s part, Robson told BUILDER today that the new association would not affect Howard’s future at the NAHB.  “Jerry Howard has the full backing of our leadership team,” he said. Would the NAHB be willing to let Howard go to get the big builders back? “No,” Robson responded.

Publicly, the Leading Builders group says the controversy surrounding the NOL provision (which was supported by NAHB and passed by Congress) was not a factor. “The decision to form LBA was not based upon differences of opinion on issues, rather to provide LBA members with a more direct line of communication to policymakers,” Ken Gear told BUILDER in an email Tuesday.

Whether that will happen remains to be seen.

While the public builders are certainly larger, wealthier companies who build a tremendous number of homes and employ thousands of people, the NAHB is more established, with a larger grassroots base and potentially more influence on elected officials.

Big builders have tried before to establish an independent group that concentrated on what they feel are their unique issues. In 2004, they founded the Public Home Builders Council of America, a nonprofit “devoted to raising awareness and recognition for the expanding role that the public builders play as stable and growing providers of housing for millions of Americans.” After a large splash, though, the group has been largely dormant for the past several years. Its former Web address now promotes “wonderful home and garden items” that can be found on the Internet.

“NAHB represents more than 200,000 members involved in all sectors of the housing industry, including home building, remodeling, multifamily construction and housing finance,” noted Robson, who says the appearance of Leading Builders won’t change the NAHB’s lobbying agenda or policy decisions. “Our builder members come in all sizes and collectively they will construct about 80 percent of the new housing units projected for 2009. NAHB will continue to advocate for the entire industry. Where it makes sense to do so, we will cooperate on issues just as we always have, and--should our interests not coincide--with the board’s input, we will pursue the most appropriate course of action for our members.”

That will probably overlap frequently, predicted Michael Sivage, who has not been involved in the dispute. “At the end of the day, 99 percent of the time we are going to be on the same side,” said Sivage, a former big private builder who sold his company to Pulte in 2003 and now builds in New Mexico and Texas as the smaller Sivage Homes. “For the industry, I don’t think it necessarily hurts us, because by and large, they’re probably going to be pushing the same issues we are.”

Alison Rice is senior editor, online, at BUILDER magazine. John Caulfield also contributed reporting to this story. 

Editor's Note: This version of the story clarifies the NAHB position on NOL, which it says it always supported.

Learn more about markets featured in this article: Washington, DC.