NAHB Predicts 'Long, Slow Climb' for Housing

Although housing starts should begin to increase by the end of the year, it will be a "long, slow climb" until production reaches the trend line, according to the latest forecast from the National Association of Home Builders.In his midyear housing outlook conference call, chief economist David Seiders said it won't be until 2010-2011 that starts will hit the 1.95 million-a-year level suggested by demographics and other factors. "We have a lot to overcome, and we don't have the usual propellants behind us such as a surge in job growth or lower interest rates," Mr. Seiders said. The new-home sector's performance in the first half and outlook for the second half is "a lot weaker than we thought six months ago," the economist said. His projection for both single-family and multifamily starts is "well down" to 1.42 million this year and 1.45 million next year. The NAHB official blamed the debacle largely on the "unanticipated and sudden turmoil in the subprime sector." He said the "breakdown in lending standards," which has spread into the prime market, has brought with it "massive uncertainty." And as a result, he added, "the ball is still rolling downhill." Single-family production, which topped out at 1.74 million units a year in the first quarter of 2006, will drop to 1.1 million units annually in the fourth quarter, the NAHB says. That's the lowest level in a decade, and a 37% decline, peak to trough. The NAHB can be found online at http://www.nahb.com.