The Housing Downswing

Real Estate Broker/Owner with Advantage Properties LLC

This artical was produced by the National Association of Home Builders 

The Housing Downswing Is Still ‘Ongoing' ...


Recent housing market data support the Fed's judgment that the stunning housing downswing extended through the middle of the year, at least on a national average basis, and that there's still downward momentum in the housing market.


Sales of new and existing homes continued to lose ground in June and house prices continued to fall in many areas of the country. The inventory of homes on the market remained quite high at mid-year, particularly on a months' supply basis, and the supplies of vacant units for-sale and for-rent remained close to record levels.


Faced with daunting imbalances between housing demand and supply, builders continued to cut housing starts and issuance of building permits in June, particularly in the single-family sector. Furthermore, NAHB's single-family Housing Market Index hit a record low in July as builders' assessments of current sales, buyer traffic and future sales all continued to decline.


...But Appears to be Approaching a Bottom


The current housing contraction already qualifies as the most serious of the post-World War II period, and there's still downward momentum in many markets across the country.


But the combination of income growth and house price declines has revived housing affordability, and growing proportions of consumers describe home buying conditions as "good".


It appears that large numbers of Americans now are seriously considering home purchases and we expect the temporary tax credit for first-time buyers to energize home sales over the balance of this year and the first half of 2009.


We expect sales of new and existing homes to bottom out in the current quarter and embark on a gradual recovery process beyond that point. The inventory overhang most likely will stretch out the declines in housing starts and permit issuance into the early part of 2009, and we do not expect the housing production component of GDP (residential fixed investment) to turn up before the second half of next year.

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