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And it's not just homebuyers who are looking for a break. You can add homebuilders to the list of embattled industries looking for government help. According to a recent Commerce Department report, new home construction is at the lowest level since records were first kept in the 1940s. Builders say government action is needed to prevent the industry from collapsing. From Miami, NPR's Greg Allen reports.

GREG ALLEN: In Florida, as across the country, more than two-thirds of the homes are built by small, independent companies. And behind nearly every company, you'll find someone like Chuck Fowke.

Mr. CHUCK FOWKE (Independent Homebuilder): I have been through probably three different housing downturns. Each one has been a little bit different, but pain is always pain.

ALLEN: Fowke has been building homes in the Tampa area for more than 30 years. He's a custom builder, designing and completing homes that run from 700,000 to well over a million dollars. As Florida builders go, he's one of the lucky ones. He's well-established with a good reputation and has just one unsold house in his inventory - the model home at a new community, FishHawk Ranch.

Mr. FOWKE: This is a 3,500 square foot Tuscan design. It feels bigger than 3,500 square feet because we have some volume ceilings. You see we have a Juliet balcony that looks down into the...

ALLEN: A little curved balcony that looks out over the great room here.

Small builders, companies completing fewer than 25 units a year, comprise 80 percent of the nation's 85,000 homebuilders. For them and the large production builders, times have never been tougher. Fowke still has some custom homes with buyers attached under construction. But over the last six months, he says, orders for new homes have dwindled to nothing.

Mr. FOWKE: I think right now we have a lot of people sitting on the fence. They don't have the confidence yet to make a move. The demand is there, but they're sitting on the sidelines just waiting for good news.

ALLEN: Fowke thought he was prepared to wait out the downturn. But like small homebuilders across the country, he suddenly found himself with a new problem. His bank refused to renew his line of credit. Lines of credit are the lifeblood for small homebuilders who use them to buy land and to finance construction. The problem began with federal regulators who in the banks that they've taken over have adopted stringent new lending policies toward homebuilders. Fowke says across Florida, Texas, and other states, other banks have now followed suit.

Mr. FOWKE: There's a cycle that gets started with the banks reacting to the Fed, and therefore the banks are beginning to want to rid themselves of builders. To a degree, builders and their business plans have become toxic for banks.

ALLEN: Fowke says it's playing havoc with established solvent builders in Florida where he's active with the state homebuilding association. He and others have taken their plight to Washington, calling on Congress and regulators to force banks to loosen credit. Large publicly owned builders - companies like Toll Brothers, Ryland, and Lennar - have access to cash reserves and other credit sources. But they have worries of their own, namely excess inventory and little consumer demand. At a recent industry conference, Stuart Miller, the CEO for Miami-based Lennar, said homebuilders need to begin thinking about the worst-case scenario.

Mr. STUART MILLER (CEO, Lennar Corporation): There's a case in today's market where there are just zero sales and everything cancels. Some might say, gee, that's Armageddon. And I say, yeah.

ALLEN: To forestall that, homebuilders are asking Congress to remember their industry when putting together an economic stimulus package. Specifically, builders want Congress to offer homebuyers a sizeable tax credit, up to $22,000 - also subsidies that would temporarily bring down the interest rate for a 30-year fixed mortgage to just three percent. Bill Kilmer of the National Home Builders Association says housing is a bedrock industry, and benefits here will be felt throughout the economy.

Mr. BILL KILMER (Executive Vice President, National Association of Home Builders) What we have proposed would be a tool to try to get people off the sidelines and get us to bottom sooner with housing prices, get rid of some of this inventory overhang, which everyone agrees is not a good thing, and take that first step to trying to get the broader ripple effect throughout the entire economy.

ALLEN: There is broad agreement that the economy can't begin to recover until the housing market stabilizes. But one of the big concerns with this plan is its cost. Housing economist Thomas Lawler, a former Fannie Mae analyst, says between the tax credit and subsidized interest rate, the plan could end up costing hundreds of billions of dollars. And he wonders if that's the best way to spend government money.

Mr. THOMAS LAWLER (Independent Housing Economist): Everybody agrees that there is a glut of housing. It's at record levels. So, what would a normal policy be to deal with a situation of a glut of homes? And I don't think the answer would be, well, let's encourage people to build more.

ALLEN: One thing is clear. Even if credit loosens and Congress takes steps to rekindle demand, things are likely to get worse for homebuilders before they get better. Some analysts believe as many as half of the nation's 68,000 small builders may not survive the current recession. Greg Allen, NPR News, Miami.

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