Housing starts and sales will continue to plummet throughout 2009, according to National Association of Home Builders (NAHB) chief economist David Crowe here at the International Builders Show in Las Vegas.
He predicts housing starts will fall 29 percent and housing sales will be down 14 percent in 2009. New home sales fell 2.9 percent in November, the slowest sales pace since January 1991.
The problem comes down to supply and demand, according to Crowe. There are too many vacant, for-sale units — an estimated 6,239,000. That figure is compounded by a steady stream of foreclosures.
Consumer confidence is "at or near an all-time low," Crowe says. The lack of demand has lead to plummeting housing prices and builders' inability to sell homes for profit.
"Virtually all builders are doing something extra [like lowering prices] to sell more inventory," says Crowe.
Reason for Optimism
Crowe does, however, say there's reason to be optimistic, pointing out mortgage rates are low — around 5 percent — and a new crop of homebuilders seem poised to take advantage.
He says the market should emerge from 2009 with an "upswing," although "not a strong one," that will be driven by low prices and "pent-up demand."
"Affordability is at a good level and the right ingredients are in place," he says. A stimulus package, which appears likely to pass through Congress, will also help.
The upswing isn't likely to help markets that were hit particularly hard like the Southwest, Crowe predicts. "In the middle of the country where the swing [wasn't as dramatic], the recovery will be sooner."