Mid-2007 will be the turning point for the nation's housing market, according to economists at NAHB's 2006 Fall Construction Forecast Conference on Oct. 25. In the meantime, the correction now underway is unlikely to push the nation's economy into recession.

The quicker-than-anticipated slowdown in housing activity, coming on the heels of several unsustainable boom years, is currently producing a significant drag on economic growth and could subtract a full percentage point from the GDP during this year's second half, said NAHB Chief Economist David Seiders. In all, the "peak-to-trough" decline in single-family housing starts is expected to amount to 25% over the period starting in the first quarter of 2006 and ending in the second quarter of 2007, he said. Much of that contraction is "already under our belts," noted Seiders, but the sizeable inventory of unsold homes that remains to be worked off means we're not yet seeing the light at the end of the tunnel.

Economists noted that the inventory situation may actually be somewhat worse than it has been portrayed by the Commerce Department to this point, since government statistics do not include homes that have been sold to a buyer who subsequently cancels the sales contract. NAHB surveys suggest that big builders' cancellations doubled in the third quarter of 2006 compared to the same time last year — although smaller companies have not been as impacted. Get complete coverage of the forecasting conference in this week's NBN Online, or contact Steve Melman for more info at 800-368-5242 x8245. [Return to top]