From the WSJ:
Builders Predict More Housing Pain
REAL ESTATE JANUARY 21, 2009
By JIM CARLTON
The worst U.S. housing downturn since World War II is likely to deepen further this year, with no broad recovery until at least 2010, according to a consensus of building-industry economists.
Single-family-housing starts, which fell 40% to 617,000 in 2007, are expected to drop to about 441,000 this year — the lowest since records have been kept — according to the economic outlook of the National Association of Home Builders released Tuesday at the International Builders Show here. That would be a nearly 75% drop from the industry’s highwater mark of 1.7 million single-family starts in 2005.
Economists from Freddie Mac, the government-backed lending agency, mortgage insurer PMI Group Inc. and the Portland Cement Association trade group also predicted this year would be worse than 2008 in terms of starts and overall housing activity.
One of the big problems for the industry, economists said, is a huge overhang of unsold homes brought on in large part by extensive job losses. The inventory of new homes on the market now stands at 11.5 months, more than double the level normally required to encourage builders to begin building again, said Ed Sullivan, chief economist for the cement group.
Adding to the woes, he and other economists said, is the likelihood that foreclosures will keep rising — putting even more homes on the market — as unemployment continues to rise this year. Frank Nothaft, chief economist for Freddie Mac, predicted the U.S. unemployment rate will jump to 8.7% by the fourth quarter of 2009 from 7.2% as of December.
Economists said lending remains so tight that many consumers won’t be able to take advantage of declining housing prices and mortgage rates. “There’s not much good to say,” David Berson, PMI’s chief economist, said at a news conference with Mr. Nothaft and NAHB Chief Economist David Crowe.
The Portland Cement Association held a separate news conference Tuesday at which its chief economist sounded even more pessimistic about prospects for a recovery. “I see another full two years almost before a significant gain,” said Mr. Sullivan, who was one of the first industry economists to predict the current downturn.