US housing still in decline, but recovery seen

15 May 2007 21:41  [Source: ICIS news]

WASHINGTON (ICIS news)--The outlook for the housing sector continues to deteriorate, US home builders said on Tuesday, with a slow recovery not expected until late this year.

 

The National Association of Home Builders said its housing market index fell an additional three points this month to 30, the lowest level since September and an indication of further loss of confidence among home construction companies.

 

The association put much of the blame on the continuing crisis in the subprime mortgage market. That market has seen steady foreclosures on so-called subprime mortgage borrowers - homeowners with poor credit who took on risky, escalating-rate loans in the housing sector heyday of the 2003-2005. The collapse of that high-risk mortgage market has put a chill on the US housing sector as a whole.

 

New home construction and home remodelling are important downstream consuming sectors for a wide variety of US chemicals and chemical-based products.

 

Association chief economist David Seiders said: “The crisis in the subprime sector has infected other parts of the mortgage market as well as consumer psychology, and as a result the housing outlook has deteriorated.” Collapse of the subprime mortgage sector and resulting foreclosures has dumped hundreds of thousands of vacant homes onto the market.

 

“We’re now projecting that home sales and housing production will not begin improving until late this year, and we’re expecting the early stages of the subsequent recovery to be quite sluggish,” Seiders said.

 

However, the National Association of Realtors said on Tuesday that slightly increased sales of existing homes in the first quarter this year may indicate that the housing slide has hit bottom.

 

Existing home sales in the first quarter were at a seasonally adjusted annual rate of 6.41m units, the realtors’ group said, down 6.6% from the 6.86m-unit pace seen in the first quarter last year but 2.4% higher than the fourth quarter 2006 level of 6.26m units.

By: Joe Kamalick
+1 713 525 2653

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