NAHB Says We Are Now In Recession

David Seiders, the Chief Economist for the National Association of Home Builders (NAHB), the nation’s largest home builder trade group stated that the country is now in a recession. In a statement issued today (4/15/08), he said: "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."

Seiders expects housing starts to drop 30% in 2008. He has asked Congress to implement a temporary home-buyer tax credit as well as to revamp the FHA and reform Fannie Mae and Freddie Mac. He believes a temporary home-buyer tax credit is probably the best way to stop the downward trend in housing prices and restoring consumer confidence in the housing market because it would get buyers back into the market.

The NAHB announced in February that it would freeze contributions from its political action committee to congressional candidates because they "felt that over the past six months Congress and the administration have not adequately addressed the underlying economic issues that would help to stabilize the housing sector and keep the economy moving forward."

Also, released today are the results of the latest Housing Market Index which is conducted by the NAHB. This index is considered a general and relevant short-form analysis of the current and future state of home sales and new home building activity. It is based upon a survey of builders as a predictor of where the housing market is headed. A score of less than 50 on the index, for any given month, indicates that more builders view housing market conditions as “poor” instead of a score above 50 which indicates that builders view the market as “good”.

The index for February, March and April has remained at 20, indicating that most builders surveyed view the market as “poor”. The low point for the index was in December of 2007 when the index was at 18, the lowest level the survey ever reached since 1985 when the survey was created.

It is anticipated that the index will rise with both the season increase in real estate activity now that spring is upon us and will also increase in the 3rd and 4th quarters of this year when it is anticipated that economic and housing market conditions will improve.