Homebuilding Not Likely to Rebound This Year

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Homebuilding Not Likely to Rebound This Year
Orlando, FL, February 13, 2008-- Housing starts could drop another 30 percent in 2008, matching last year’s sharp drop, according to a forecast by the National Association of Home Builders presented at the organization’s annual convention.

The forecast, developed by NAHB Chief Economist David Seiders, calls for new-home sales to fall to a 25-year low of 632,000 units in 2008, a drop of more than 20%. Existing-home sales will drop as well, to a 20-year low, of 4.33 million units.

The national median price is also expected to drop again this year. When housing hits bottom, likely in the middle of next year, prices will have fallen about 15 percent from mid-2006.

"The housing market, continuing the dramatic contraction that has been developing over the last two years, is putting a big hit on overall economic activity," Seiders said. "The economy is in rather weak condition at the moment. We think the economy will avoid an actual recession, but we had a weak fourth quarter, we're going to have a weak first quarter and the second quarter is not going to be so hot either."

Seiders thinks 2009 will be the year housing turns around but that is by no means certain.

"This easily could spiral downward the way things feel now," he said.

Seiders said that one of the biggest hurdles for the economy is the credit crunch in financial markets.