By a 217 to 215 vote, the House today passed H.R. 2811, the Limit, Save, Grow Act of 2023, which would raise the federal debt ceiling. Although this bill will not pass the Senate, NAHB believes that its passage in the House will mark the start of bipartisan discussions to resolve this issue.
The debt ceiling is a cap on the total amount of money that the federal government is authorized to borrow to fulfill its financial obligations. If the government cannot borrow money to pay its existing bills, it would default on its debt, and this unprecedented event would send shockwaves through the U.S. and global economies.
The Limit, Save, Grow Act includes provisions NAHB strongly supports, such as H. R. 1, the Lower Energy Costs Act, which would eliminate a $1 billion grant program used to pressure state and local governments to adopt costly energy code requirements, and the Regulations from the Executive in Need of Scrutiny (REINS) Act, which would require congressional approval prior to federal agencies enacting costly regulations.
NAHB also supports some changes made by H.R. 2811 to the existing energy tax incentives, particularly removing prevailing wage and other labor incentives that have no connection to energy efficiency, but we do not support the wholesale roll back of the energy tax incentives. NAHB strongly believes there is a role for the tax code to incentivize energy efficiency.
Significant reductions to discretionary spending may also weaken federal investments in workforce and housing programs, which are critical to our nation’s ability to produce affordable housing. These investments would be jeopardized under the spending freeze and growth limits imposed by the legislation.
NAHB has expressed our concerns directly to House leadership, and as this process moves forward, we will continue to engage with policymakers to ensure the debt ceiling is lifted without harming home builders. NAHB recognizes that the debt ceiling increase will only be resolved through bipartisan negotiations between the House, Senate and White House, and we urge both political parties to work towards a bipartisan agreement to lift the debt ceiling.
It is critically important for the economy, and the housing industry specifically, that Congress and the White House find common ground on the debt limit. Failing to raise the debt ceiling could have significant negative consequences on the housing market, which remains vulnerable to increasing interest rates and interest rate uncertainty. Even the threat of default could jitter the financial markets and result in unduly upward pressure on mortgage rates and other borrowing costs.
As interest rates have increased, the housing market has weakened but found some stability with mortgage rates below 7% — rates are currently at 6.4%. Further increases could produce a vicious cycle whereby housing price declines reduce household wealth, which reduces consumption, business growth and job creation. Higher interest rates also place increased financial stress on multifamily projects that rely on debt financing.