US home builders see recession through midyear

15 April 2008 18:35  [Source: ICIS news]

WASHINGTON (ICIS news)--The US economy has slipped into a mild recession, pulled down by the ongoing housing market decline that is now forecast to continue through the rest of this year, a top home construction economist said on Tuesday.

 

The National Association of Home Builders (NAHB) said that the continuing housing slump and resulting “serious erosion of consumer sentiment” have pushed the $14,000bn (€8,820bn) US economy into recession.

 

The home builders also have pushed back their outlook for a housing sector recovery, saying the downturn in new residential construction is not expected to hit bottom until early 2009 at best.

 

Previously, NAHB chief economist David Seiders had been predicting that the two-year decline new home construction would bottom out in the third quarter this year.

 

The residential construction market is a crucial downstream consuming sector for the US chemicals and plastics industries.

 

“It is now clear that we have entered what we anticipate will be a mild recession, running through the first half of this year,” Seiders said.

 

In addition, he added, “there are substantial downside risks to this economic scenario”.

 

Seiders said that unless Congress moves quickly to further stimulate home building and the broader US economy, “the housing sector will continue to be a serious drag on economic growth until the beginning of 2009”.

 

The NAHB economist said he expects continuing downward movement in housing starts - the key measure of new home construction - through the end of this year. By year end, he said, the US will have seen a full 30% decline in the residential construction market.

 

NAHB called on Congress to do more to help steady the housing industry and enable a recovery by providing a temporary home buyer tax credit.

 

“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.

 

($1 = €.63)

By: Joe Kamalick
+1 713 525 2653

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