up to a total of $500,000,000. Mortgage lenders could obtain such advance contracts in amounts equal to the price they paid for mortgages purchased from FNMA. During the rest of the year such purchases decreased FNMA holdings while creating a substantial reserve of contracts to purchase future mortgages.

During the year, HHFA also undertook an acceleration of local community action to clear slums and rehabilitate blighted areas. As local community responsibilities in code enforcement, rehabilitation, and neighborhood maintenance received new emphasis from the HHFA, strong local movements were developed and national attention was focussed on expanded activities in this field. At the same time the federally assisted program of slum clearance and urban rehabilitation authorized by the Housing Act of 1949, swung into fullscale operation; by the end of the year, 154 projects in 108 localities were well underway, with demolition already started in 32 slum areas. The problem of adequate housing for low-income families was a matter that clearly called for extensive reexamination and study, and it received major attention from the new administration and the President's advisory committee during the general review of housing policies and programs. Pending the administrative review, and recommendations on low-income housing which Congress requested the HHFA Administrator to make early in 1954, Congress authorized 20,000 public housing units to be started in fiscal year 1954. All of these had to be in projects already under contract, and no new commitments could be undertaken by the Public Housing Administration during the year.

Programs in Liquidation

Another major activity of the new administration was speeding up of liquidation and termination of housing operations which had served their original purpose and were no longer needed. Efforts of the HHFA Administrator and the Public Housing Commissioner to accelerate disposition of World War II and veterans emergency housing built under the Lanham Act resulted in a very substantial reduction in the Government's holdings of such units. By the end of 1953, 69,000 units-twice as many as in 1952-had been sold, transferred to localities or otherwise removed.

The HHFA also prepared for termination of the defense housing and community facilities and services program authorized by Public Law 139 (82d Cong.). During the year the construction peak for defense housing was passed, and most of the 92,500 units which had been approved for private construction in critical defense housing areas were either built or in the final stages of completion. The pro

gram of community facilities for such areas reached the construction or completion stage.

The HHFA Administrator ordered the loan operations of the Alaska housing program to be placed in liquidation, after determination that it had largely accomplished the objective of helping overcome the acute housing shortage in that region. A substantial volume of housing, much of it stimulated by the program, had been built, and authorization for FHA builder commitments on terms equal to those formerly applicable only to loans made by the Alaska Housing Authority will help provide adequate construction financing from non-Government sources. The authority for FNMA to purchase FHA-insured mortgages in Alaska continued during the year.

In accordance with the Independent Offices Appropriation Act for 1954, the HHFA Administrator began the orderly liquidation of the program of housing research. Under this program, a number of research projects into the technical and economic phases of housing had been undertaken, and by the end of 1953 many studies had been completed, and termination of active research projects was going forward speedily.

Legislative Developments

In addition to authorizing increased maximum interest rates and the charging of certain discounts for certain types of Governmentbacked mortgages, and the FNMA "one-for-one" plan, Congress also approved a number of modifications in housing legislation. Among them were standby authority for the President to liberalize FHA mortgage provisions on lower-cost owner-occupied housing if economic conditions warrant, permitting smaller downpayments and longer maturities; increased maximum permissible mortgage amounts on certain types of rental housing built with FHA mortgage insurance; strengthening the FHA Mutual Mortgage Insurance Fund; and authorization of repayment by FHA to the United States Treasury of funds provided to FHA to carry out the provisions of some of its programs when it was first getting started. By the end of the year FHA had repaid $64,200,000, or about 75 percent of these funds to the Treasury.

Chapter II

HOUSING IN THE ECONOMY IN 1953

A. Housing Production

Starts Volume

Despite some tightness in the mortgage market, especially during the first half of the year, home-building activity during 1953 reached a total volume of about 1,104,000—the third highest total on record and the fifth consecutive year to top the one million mark. This high total was achieved in the face of a midyear decline in the rate of private starts, which at the time became the cause of some concern. By the end of the year, the starts rate had climbed back to the first quarter levels.

The slightly more than 1,068,000 privately owned dwelling units started in 1953 represented virtually no change from the 1952 level. During 1953, nearly two-fifths of these private starts were financed under FHA and VA programs. In contrast with the stability in private home building, publicly owned starts were two-fifths less than in

1952, reflecting congressional limitations upon the federally aided low-rent housing program.

The proportion of nonfarm starts in rural locations continued to rise, reaching 49 percent in 1953. Since the end of World War II, 44 percent of all nonfarm starts have been located outside urban areas (incorporated communities of 2,500 or more), while in the decade of the twenties this proportion was 20 percent.

The trend towards sales-type housing also continued. Single-family homes accounted for 85 percent of all nonfarm homes started in 1953. This was the highest proportion since 1947 and was far above the ratio of the twenties, when single-family homes made up 61 percent. of all starts.

Dollar Volume

The dollar volume of all new nonfarm home building totaled $12.5 billion-a gain of 7 percent over the previous year but still 3 percent below the 1950 peak.

The fragmentary data available on outlays for nonfarm home repair and modernization suggest a level in the neighborhood of $10 billion in 1953. In other words, total nonfarm home construction and repair activity amounted to over $20 billion during 1953.

B. Materials and Labor Supply

A new high in production of building materials was set in 1953, according to the composite index maintained by the Department of Commerce. The index shows that the 1953 aggregate was nearly twothirds greater than in the base year 1939. It was 6 percent greater than in 1952 and 3 percent above the previous record year, 1950.

Increases over 1952 were recorded for 15 of the 20 principal materials and products that are important to residential building and for which dependable statistics of output are available.

Source: Department of the Interior, Department of Commerce, trade associations.

The good production record resulted in an adequate supply of materials for the high level of housing construction in 1953. There were virtually no materials shortages, and none of any magnitude.