The worst of the U.S. housing downturn may have passed and the sector should stabilize by the end of next year, three economists who study the nation’s housing sector said Thursday.
“The big drag of housing will be letting loose, hopefully, by the middle of next year,” said David Seiders, chief economist for the National Association of Home Builders.
Seiders was taking part in a conference call with David Lereah, the National Association of Realtors’ chief economist and David Berson, the chief economist for mortgage finance company Fannie Mae.
“Our forecasts are pretty close,” Seiders said of the economists’ outlooks.
Of the three, Berson said he saw probably the most slow-paced turnaround, with prices down 1 to 2 percent in 2007 and total home sales falling by 6 percent.
The 12-month picture will show a decline, Berson said, but an upturn should begin before year-end 2007.
“The key thing is that the housing downturn is close to an end,” he said. “Whether it ends now or three more months from now, it will not continue (throughout) 2007.”
The NAR’s Lereah repeated his prediction that sales of existing homes would contract 1 percent next year.
Lereah stressed that the housing market’s strength will vary and said regions that have recently seen big price gains will likely feel the hardest pinch.
About 25 percent of the nation will continue to see a price correction, he said, and in some parts of California and south Florida that correction “will be prolonged.”
Meanwhile, 75 percent of the nation’s housing markets will continue to expand at a moderate pace, Lereah said.
All three economists agreed that the nation’s housing market is still reverberating after a multiyear boom.
“A lot happened in that boom and we have some paying back to do yet,” Seiders said.
He sees home sales “bottoming out at the end of 2006,” with housing starts remaining low and picking up only after the first quarter of 2007.
