The National Association of Homebuilders (NAHB) is forecasting that the housing market could reach bottom by the second quarter of 2008, with a "pretty good expansion" occurring once again in 2009. The top builder association shared the news during a pre-holiday conference call hosted by CEO Jerry Howard and David Seiders, NAHB's Chief Economist.
Seiders sees new home sales bottoming out in the first quarter of 2008. He noted that recent price declines, which he labeled a "correction process," are helping to "revive affordability." He sees housing starts reaching their lows in the the second quarter of 2008, and beginning to rise once again. He cautioned that while single family and multifamily rental building would see recovery, the condo market could still be in for more pain.
Seiders conceded that the economy is currently in a "danger zone" nearing recession, but thinks the U.S. will avoid one. Seiders assigned a 40 percent chance of a recession in 2008. He also said that a housing turnaround hinges on several outside forces, including another rate cut by the Fed at the end of January 2008, and more help for the short term credit markets. Programs to help borrowers with ARM loans are also critical, since mass foreclosures will flood the real estate market with excess inventory.
Housing should cease to be a drag on the economy after the first half of 2008, and Seiders sees positive growth for the second half, which "will be a major turning point for the economy." In 2009, NAHB forecasts the housing industry will grow about 6.5 percent.
Source: NAHB.org