Belated Help

Although homebuilding has become a principal victim of the fight against inflation, the Nixon Administration has been resisting many of the industry's pleas for special help. Several Government agencies have poured a total of $13 billion into mortgages, loans and commitments, but even so, housing production has fallen 36% since January 1969, to an annual rate of only 1,166,000 starts. Vacancy rates in many big cities have approached the vanishing point. Last week the Administration took action on several fronts at once to help overcome the nation's worst housing shortage in two decades.

To funnel still more money into private housing, the Administration decided to ask Congress to give the Home Loan Bank Board $300 million to subsidize loans to savings and loan associations.

The money is intended to enable S and Ls to increase their mortgage lending, now crippled by heavy deposit withdrawals. Provided Congress agrees--a big if--the subsidy plan could mean a $4.5 billion increase in S and L mortgage lending over several years, because each $1 of subsidy would generate as much as $10 or $15 in loans to home buyers. In a companion move to stanch the deposit drain, the Government raised the minimum denomination of Treasury bills from $1,000 to $10,000. Depositors have been shifting their savings from S and Ls and banks into the higher-yielding Treasury securities.

Since last May, Housing and Urban

Development Secretary George Romney has been urging the housing industry to adopt more modern methods of construction. To foster such progress, the department sponsored a competition, called "Operation Breakthrough." Last week, months behind his original schedule, Romney picked 22 companies to build 2,000 mass-produced houses and apartments in ten cities. The winners, chosen from among 236 proposals, will share HUD contracts that may total as much as $50 million and will also invest some $40 million of their own money.

With characteristic optimism, Romney had been promising that Breakthrough would achieve "total new systems of housing construction." In fact, almost none of the winners offered technological ideas that are particularly exciting. Instead, Romney conceded last week, the plans display "what is possible under existing technology." Of the 22 systems, six use wood, five metal, two plastic-foam panels, two glass-fiber panels, and seven concrete. Romney pointed out that the selections at least involve some shift away from increasingly scarce and costly wood. For example, Shelley System of Puerto Rico uses prefabricated concrete modules that are stacked in checkerboard fashion.

Faster Innovation. Despite its technical shortcomings, Breakthrough does promise important advances in the laggard housing industry. Many of the winners--Republic Steel, Alcoa, General Electric, TRW Systems Group, for example--are large corporations hitherto involved little or not at all in actual construction. Their entry into a chronically underfinanced field should help innovations to move faster from drawing board to marketplace. Breakthrough has also focused attention on the need for more efficient use of land, less restrictive building codes and better financing methods, if the nation is to reach its ambitious goal of 26 million new and rehabilitated housing units by 1978. For example, Romney has already negotiated waivers of local building codes and zoning regulations in the cities where Breakthrough units are to be built. Breakthrough's impact on U.S. housing will be slow, but the program is an overdue step in the right direction.

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