Economists at NAHB Debate High Unemployment's Effect

High unemployment levels will slow the pending housing recovery, economists speaking at the National Association of Home Builders' annual convention in Las Vegas agreed. But they didn't agree on just how much of a drag the poor job market would be. NAHB chief economist David Crowe, Frank Nothaft of Freddie Mac and David Berson of PMI tended to believe that while gains "won't be very big," buyers are poised to return to the field. But Edward Sullivan, chief economist at the Portland Cement Association, Skokie, Ill., said he reads the tea leaves a little differently. "Housing will turn," he said, "but not until very late this year and nowhere near the magnitude" the mainstream economic community suggests. Noting that small businesses shed 2.2 million workers over the last six months and are still doing so, Mr. Sullivan said the economy won't start generating jobs again until the second half of this year. He also cited the expiring homebuyer tax credits, the huge backlog on foreclosures and continued tight lending standards. The PCA economist said the market isn't likely to improve until the fourth quarter of 2010 and may not show real gains until the first quarter of next year. "I'm still projecting an increase" in starts "but I'm much more modest," he said. "There are so many hurdles out there that a full-fledged recovery won't materialize this year." The other economists voiced the same concerns. Nevertheless, they were more optimistic. The NAHB's Mr. Crowe said starts would jump from 555,000 last year to 700,000 in 2010. Mr. Nothaft of Freddie Mac was even bolder, suggesting that starts would reach the 775,000 level. PMI's Mr. Berson, the former chief economist at Fannie Mae, said starts would increase to 675,000.