US housing sector to recover in late 2007

13 March 2007 16:05  [Source: ICIS news]

WASHINGTON (ICIS news)--The US housing industry should begin to recover later this year despite increasing mortgage lending problems and variable weather patterns, the National Association of Realtors said on Tuesday.

 

The association said that existing home sales are projected at 6.42m units this year and 6.66m units in 2008, compared with the 6.48m existing homes sold in 2006.

 

Housing starts are forecast at 1.5m units this year and 1.56m in 2008, the association said, figures that are below the 1.8m housing starts seen in 2006.

 

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals and chemicals-based products such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres, among many others.

 

"Underlying trends point to a housing recovery in 2007, but it will take a couple months for us to get a better handle on it.  Existing home sales are expected to slowly improve from what appears to be the cyclical low last fall, but we think there will be some additional pain in the new home market, which hopefully will start to rise later in the year," said the chief economist of the National Association of Realtors, David Lereah.

 

New home sales have been hurt especially by a crisis among what are called sub-prime mortgage lenders in the US - investment firms that make home loans available to less-desirable borrowers.  Many such loans made in the high housing market of 2003-2005 have gone into default, and more banks are now avoiding loans to sub-prime borrowers. As a result, fewer homes - and especially new homes - are likely to sell.

 

Weather also has played a significant role, Lereah noted.  In an unusually mild December 2006, home sales picked up, but a sharp return to winter weather in January slowed home sales and construction considerably, he said.

By: Joe Kamalick
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