If you read at all, you can’t escape the almost daily headlines about the housing industry crash. Newspaper, magazines, websites, blogs, newsletters (including the Strategic Beacon) all relentlessly blare headlines about the incredible crash of the housing market over the last year-and-three-quarters.

But how low can it go? Will it impact the economy? Will it cause a recession? What are the experts saying about when it will finally end?

The National Association of Home Builders (NAHB) held a “Fall Construction Forecast Conference” of economists on October 24th (you can imagine how exciting a conference of economists must be) to discuss just these questions. There were several key proclamations to come out of this conference…especially those items shown below:

>>The housing market is still undergoing a correction. Most economists see the momentum continuing downward with key speakers suggesting that the bottom or “trough” is in sight for late 2008.

>>Although new home sales showed a surprising increase in September of 4.8%, this can be misleading as it is a volatile indicator. When the September report was released, the preceding three months were revised downward. The NAHB still reports downward pressure in new home sales. Still, should the September results hold, this may indicate a reduction in the inventory “overhang.”

>>And speaking of inventory overhang, builders still are sitting on 8.3 months worth of homes to sell, at the current rate of sale. The good news is that, while the overall number is still high, they are down from 9 months of inventory previously reported.

>>David Seiders, Chief Economist for the NAHB, forecasts new home sales for 2007 to come in at 828,000. For 2008, he anticipates sales of 781,000 for a 5.6% decline. Seiders notes that this will make the “peak-to-trough” decline from the boom years of 2003-2005 more than 40%.

>>Seiders sees the recovery taking hold with stabilization in the third quarter of 2008 and slowly increasing
growth starting in the fourth quarter and continuing into 2009.

>>Seiders goes on to predict that by the end of 2009 we will see a housing start pace of approximately 1.5 million units…eventually growing to 2 million units per year. This would firmly place one of the worst industry recessions since the 1960s behind us.

>>All of the panelists place the odds of recession within the next twelve months at between 30 and 40%...assuming consumer spending, job and income growth all remain positive.

So tighten up your marketing plans and hang in there…things are finally beginning to look up in the near future.

NOTE: Take a close look at the Single-Family Housing Starts and the New Home Sales charts at the right and you will clearly see that the NAHB is forecasting a strong upward trend beginning late 2008 and continuing through 2009.

All charts were supplied by the National Association of Home Builders in October 2007.