'Fix' Could Bring 1 Million Sales, 200,000 Starts

A pair of short-term, targeted incentives aimed at enticing would-be home buyers back into the market could result in as many as a million more sales this year, the new chief economist of the National Association of Home Builders said at the group's convention in Las Vegas. An enhanced home-buyer tax credit, coupled with an with a deep and permanent interest-rate buy down, would also result in some 200,000 more housing starts, David Crowe told Mortgage Wire. NAHB has been pushing the incentives on Capital Hill as part of its Fix Housing First campaign. Without them, Mr. Crowe told the convention, new home sales will continue to fall to an annual rate of 380,000 by the end of the first quarter. The last time the sales rate was that low was in the second quarter of 1982, when the annual pace was pegged at 364,000 units. At the same time, Mr. Crowe also is forecasting a gradual increase in sales beginning in the second quarter and a "modest" uptick in housing starts some months later after most of the 1.5 million in excess inventory is sold off. But he warned that the recovery will be a "rolling" one with those markets where prices were not out of line and inventories were not out of kilter being the first to turn upward. The recovery won't reach the "headline states" - California, Nevada, Florida and Arizona - for some time, he said. While some NAHB members believe his forecast is too optimistic, the economist defended it, saying it is "not out of line" with what others are predicting. "If anything, I try to be more pessimistic so I don't get builders to do something they shouldn't," he said. The NAHB says more than 3 million jobs in residential construction and related businesses have been lost since the housing sector tanked.