The chief economist for the National Association of Home Builders, in his latest annual forecast, said he expects total housing starts to fall 25 percent this year, with single-family starts plummeting 31 percent.

“We still expect starts to begin edging up in the final quarter of this year, but we’ve also trimmed the outlook for 2009,” Seiders stated in a forecast report released this week.

Seiders acknowledged that there is “a nearly even chance” that the economy will slip “into the red zone during the first half of the year.” He anticipates “further deterioration of labor market conditions in February, and the unemployment rate almost certainly will be moving up in coming months.”

He also expects gross domestic product growth of less than 1 percent in the first half of 2008, “and a mild recession certainly is possible during that period,” the report states.

“Our baseline housing forecast shows substantial reductions in home sales, housing starts and residential fixed investment for 2008 as a whole, but we’re looking for stabilization of all three measures (in that order) by the end of the year, and 2009 is shown as a decent recovery year.”

A record volume of vacant homes for sale “inevitably will put persistent downward pressure on home prices, further sapping the quality of outstanding mortgage credit and making it even more difficult to refinance or restructure adjustable-rate mortgages facing payment resets,” the report states.

Financial market turmoil is continuing, Seiders noted, as “the stock market is being battered and the markets for longer-term credit remain under considerable strain.

“The freezing-up of private securities markets, both here and abroad, has shifted credit demands to government-related securities markets and to depository institutions — resulting in higher loan volume and pressures on capital positions at the depositories.

Rate cuts by the Federal Reserve should continue in upcoming meetings in March and April, according to the report, “and the Fed could deliver even more monetary stimulus if conditions warrant.”

He states that the Economic Stimulus Act of 2008, signed by President Bush on Feb. 13, does offer some glimmers of hope, as its temporary increases in loan-size limits “are bound to help the housing market in high-priced areas (like California) to some degree,” though “it remains to be seen how much additional home buying will be stimulated over the balance of the year.”

The report adds, “Expiration of the higher limits at year-end figures to be a serious problem in the likely event that the private secondary market for jumbo loans still is not functioning properly by then.”

And Seiders suggests that tax incentives for home buying could offer a boost to the housing market, if “coupled with policy measures that enhance the availability of mortgage credit,” via federal and state housing finance agencies.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×