NAHB Economist Cuts Construction Forecast

Washington, DC, April 24, 2009--The chief economist of the National Association of Home Builders cut his housing starts forecasts for this year and next by a quarter, now saying he's expecting 490,000 starts in 2009 and 649,000 in 2010.

David Crowe gave the revised forecast at the NAHB spring construction forecast conference. Both numbers are sharp drops from the 905,000 starts in 2008 and suggest America's housing industry will take years to return to its former levels.

In January, Crowe had predicted 649,000 starts this year, of which 461,000 were single-family homes and 188,000 were multifamily units. Now he's looking for 360,000 single-family homes and 130,000 multifamily units to go up in 2009.

Looking ahead to 2010, Crowe previously projected 664,000 single-family starts and 205,000 multifamily starts next year. He has revised that those figures to 523,000 single-family and 126,000 multifamily starts in 2010.

In essence, Crowe's 2009 predictions were pushed to 2010.

It wasn't all pessimism at the conference, however.

"When there is an opportunity to build, there's at least downward pressure in the underlying material prices," Crowe said.

Maury Harris, an economist with UBS Securities LLC, shared this view.

"We've seen the downturn in house prices, we've seen the recession, but the good news is, I'm finally turning into an optimist," he said. "I think the second half of the year we're going to see a turnaround."

He added, "We think the worst is behind us."

Regarding the credit crunch, Harris said he thinks that lending standards will soon ease—at least in the mortgage area, if not more widespread.

James Glassman, an economist for JP Morgan Chase, also applauded the government's efforts to revive the economy.

"We all have complaints about what's going on [in Washington] … " he said, "but the truth is, if you look at the actions we're taking, [I] thank God."