The chief economist for the nation’s largest home builder trade group said today that the country is clearly in a recession.
"It’s now clear that we have entered what we anticipate will be a mild recession, running through the first half of this year, and there are substantial downside risks to this economic scenario," said David Seiders, of the National Association of Home Builders, in a statement today.
Seiders joins a growing chorus of experts, including former Federal Reserve Chairman Alan Greenspan, who say the country is in the midst of a recessionary period.
In a February economic forecast, Seiders had said that there is "a nearly even chance" that the economy will slip "into the red zone during the first half of the year."
And in an August 2007 presentation about the credit crunch, Seiders said that the scope of the housing market contraction "certainly rivals the 1990-91 contraction when we did have an economic recession," and at that time he said that the risks of recession were growing.
In his latest market forecast, Seiders anticipates that housing starts will drop 30 percent this year — that is more severe than the 27 percent annual decline that he predicted last month.
The builders’ group is asking Congress to help mend housing-market problems. Seiders said federal officials should work to implement a temporary home-buyer tax credit, to modernize the Federal Housing Administration, and to reform oversight of government-sponsored mortgage entities Fannie Mae and Freddie Mac.
"Stopping the downward trend in housing prices is key to bolstering consumer confidence as well as mortgage credit quality, and a temporary home-buyer tax credit is the best way to do that," Seiders said in a statement today.
Stimulus legislation passed in the Senate and in a House committee "are welcome steps in the right direction," he said.
The president of the builders’ association announced in February that NAHB was freezing contributions from its political action committee to federal congressional candidates because the committee’s board "felt that over the past six months Congress and the administration have not adequately addressed the underlying economic issues that would help to stabilize the housing sector and keep the economy moving forward."
Also today, the builders’ group released the latest Housing Market Index, which is based on a survey of builder opinions about the current and future state of the new-home market.
The index sat at 20 for the third consecutive month in April, not far from a record low of 18 set in December 2007 — a score below 50 indicates that more builders view market conditions as "poor" than "good."
Launched in January 1985, the survey gathers builder input about whether builders view the current single-family home sales market as "good," "fair" or "poor," and also asks about sales expectations for the next six months and the level of current traffic of prospective buyers.
The index component that gauges current sales conditions was at 18 in April, its lowest level since November 2007. The component gauging sales expectations for the next six months was 30, and the component gauging traffic of prospective buyers stood at 19, which compares to a low of 13 in December 2007.
Regionally, the index was 22 in the Northeast, 15 in the Midwest, 24 in the South and 17 in the West.
A separate report by the California Building Industry Association, a statewide builders’ trade group, reported that new-home sales in California were down 57.2 percent in February compared to the same month last year, with the median price of new homes falling 14.2 percent.
Sales of all new-home types slipped from 7,458 in February 2007 to 3,191 in February 2008.
New single-family home sales dropped 51.5 percent in February 2008 compared to February 2007, with the median price of new single-family homes falling 14.9 percent.
New condo sales dropped 78.5 percent statewide year-over-year in February, CBIA and Hanley Wood Market Intelligence reported, with 359 new condo sales in February 2008. New condo median prices dropped 2.3 percent in February 2008 compared to February 2007.
The U.S. Census Bureau and U.S. Department of Housing and Urban Development reported that new single-family home sales dropped to the lowest rate in February since 1995, with sales falling 29.8 percent year-over-year nationwide. The U.S. median price of new single-family homes dropped 2.7 percent year-over-year in February.
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