- CHICAGO (MarketWatch) --
Housing is in its "deepest, most rapid downswing since the Great Depression,"
the chief economist for the National Association of Home Builders said
Tuesday, and the downward momentum on housing prices appears to be accelerating.
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- The NAHB's latest forecast calls for new-home sales to
drop 22% this year, bringing sales 55% under the peak reached in late 2005.
Housing starts are predicted to tumble 31% in 2008, putting starts 60%
off their high of three years ago.
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- "More and more of the country is now involved in
the contraction, where six months ago it was not as widespread," said
David Seiders, the NAHB's chief economist, on a conference call with reporters.
"Housing is in a major contraction mode and will be another major,
heavy weight on the economy in the first quarter."
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- A home-sales measure tracked by the association that
includes data on cancellations from 30 large U.S. builders that account
for one-quarter of all sales shows sales down 65% from their peak in 2005,
Seiders said. Government measures of home sales do not include numbers
from contracts that were signed but buyers later backed out.
- Vacant homes for sale in the U.S. now number about 2
million, Seiders said, an increase of 800,000 from 2005. That inventory
overhang is bedeviling builders, who have been forced to cut prices and
write down the value of their holdings.
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- "Weak demand and oversupply naturally put downward
pressure on prices," Seiders said.
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- Citing the Case-Shiller index, Seiders noted that home
prices nationally have fallen nearly 10% from their peak in early 2006
and that prices were declining at a 19% annual rate in the fourth quarter.
"The downward momentum was building at the end of the year,"
he said. Read the latest Case-Shiller numbers.
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- Home sales may bottom out later this year, Seiders predicted,
but housing starts are not likely to rebound until 2009. Housing, which
took 1.25 percentage points off GDP in the fourth quarter, looks like it
will continue to be a major drag on gross domestic product at least through
the end of 2008, he said.
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- Steve Kerch is assistant managing editor and personal
finance editor of MarketWatch in Chicago.
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