NAHB Predicts Housing Will Bottom This Year

Las Vegas, NV, Jan. 21, 2009--Housing will not look much better at the end of this year than it does now, but "we do expect '09 will be the bottom," the chief economist for the National Association of Home Builders said Tuesday.

David Crowe, speaking at the International Builders Show, said housing starts are expected to fall nearly another 30% in 2009 and new-home sales will drop 14%. But he said he expects the trough of the market to occur sometime in the middle of the year.

"We should come out of 2009 on an upswing. It won't be strong, and we will still have home-price declines throughout the year, but it will be an upswing," he said.

Weighing on housing market forecasts is the continued decline in employment. Frank Nothaft, chief economist for mortgage agency Freddie Mac, said he expects unemployment will jump to 8.7% by the end of 2009, from the current 7.2%. And that, in turn, will push mortgage delinquencies and foreclosures higher, adding to an already bloated supply of homes on the market.

The job picture also dims consumer confidence, which is at or near historic lows, making consumers afraid to go out and buy anything durable, and that certainly includes a home," Crowe said. That is making it difficult to work off the excess inventory of homes for sale.

Crowe estimates that 6.2 million homes are vacant and on the market, with about one-third of those homes being new construction. He said that represents about 1.5 million units above what would be an equilibrium rate for housing.

"And adding to that static supply is the continued number of homes going into foreclosure," he said.

Builders are making an effort to clear that supply, Crowe said, both by trimming housing starts and by cranking up incentives to move empty houses.