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The National Association of Home Builders (NAHB) chief economist said the economy is in a “mild recession,” the result of the deepening slump in the housing markets that “seriously eroded” consumer sentiment.
“The worse-than-anticipated housing downturn, combined with systematic weakening of the labor market and rapidly rising energy and food prices, has taken a heavy toll on American consumers,” said NAHB's David Seiders. "It's now clear that we have entered what we anticipate will be a mild recession, running through the first half of this year, and there are substantial downside risks to this economic scenario.”
The NAHB, which has a track record of generally optimistic forecasts, downwardly revised its official housing forecast to a 30 percent decline in housing starts for 2008, instead of the previously forecast decline of 27 percent down.
The NAHB is lobbying for immediate steps that it says will guard against a longer and deeper downturn. The recommendations target the housing market, such as a temporary home buyer tax credit, modernization of the Federal Housing Administration and oversight reform for the housing-related government sponsored enterprises.
"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," he noted.