The housing market would stabilize sooner if the U.S. government reasserted its commitment to the housing sector and homeownership. The terms of that recommitment, though, probably won’t be clear until the next political election cycle is completed.

“What we’re going to insist on [in the meantime] is that [politicians] state their positions on housing,” said Jerry Howard, president and CEO of the NAHB, in comments he made last Thursday at Standard & Poor’s Housing Conference in New York.

Those positions, no doubt, will continue to be colored by how quickly the housing market recovers. Howard told his audience that the NAHB had recently downgraded its projections for housing starts for 2011, which “won’t improve on 2010.” The association now predicts a “slight increase” in 2012, followed by “a more robust market” in 2013.

That timetable, however, could be disrupted, said Howard, by certain housing finance reforms that, in his estimation, “would further diminish home values and make it harder for people to buy houses.” While Howard did not mention in detail which reforms the NAHB objected to, it was clear to everyone in the audience—who had just sat through a day’s worth of sessions that mostly focused on the state of housing finance—that proposals calling for higher down-payment requirements for qualified mortgages and the elimination of the mortgage interest deduction were probably at the top of the trade group’s list.

Howard admitted that some in the audience might question his credibility, given housing’s central role in the country’s financial collapse. Nevertheless, he continued to defend the policies of the Bush and Clinton administrations that supported homeownership, while blaming the housing sector for being “overly aggressive” in implementing those policies.

He also referred to a recent NAHB poll of 2,000 likely voters, 73% of whom agreed that it was “appropriate” and “reasonable” for the federal government to provide tax incentives for homeownership. Three quarters of those polled also still see owning a home as a worthwhile investment.

“Economic data and economic analysis are not the rule of law in America,” said Howard, taking a poke at economists who have been calling for the government to scale back its presence in the housing and mortgage sectors. “It ain’t playing out in the marketplace that the dream of owning a home is dead.” 

He reiterated that housing is not “a national commodity” but a series of local markets, many of which “are ready for recovery” if only banks and other lenders would take a closer look at them. Howard also called for a continuation of the government’s lending backstop, regardless of what happens to Fannie Mae and Freddie Mac, so that mortgage financing would be available to as many eligible borrowers as possible.

The problem now, he said, is that the political arena is polarized by the “far right,” which opposes any and all spending that requires new revenue; and by the “far left,” whom Howard caricatured as “wanting everyone to live in Soviet-style apartments.” With these politicians having drawn their lines in the sand, Howard thought it would be virtually impossible to reach agreement on housing finance reforms until after the 2012 elections.

He estimated that there are currently more than two million potential home-buying consumers who are waiting to jump into the market. “Once we get through this election cycle, the American housing sector will rebound strongly and move forward as a more prudent housing industry,” said Howard.

To accommodate that demand, “what our builders need is for the playing field to be defined. Tell us what the rules of the game are.”

John Caulfield is senior editor for Builder magazine.

Learn more about markets featured in this article: New York, NY.