NAHB chief economist David Crowe cut by one-quarter today his housing starts forecasts for this year and next, now saying he's expecting 490,000 starts in 2009 and 649,000 in 2010. Both numbers are sharp drops from the 905,000 starts in 2008 and suggest America's housing industry will take years to recover.
In January, Crowe had predicted 649,000 starts this year--461,000 single-family homes and 188,000 multifamily units. Now he's looking for 360,000 single-family and 130,000 multifamily homes going up. For 2010, he had predicted three months ago there would be 664,000 single-family homes and 205,000 multifamily units started. But now he's looking for 523,000 single-family and 126,000 multifamily homes. In essence, what used to be his 2009 predictions were pushed to 2010.
Crowe gave his forecasts at NAHB's Construction Forecast Conference. Another speaker at that same event--Maury Harris, chief U.S. economist for the Swiss banking giant UBS--largely echoed Crowe's forecast. Harris said he's expecting roughly 530,000 starts this year and 720,000 in 2010.
Builders were starting homes at an annual rate of nearly 2.2 million homes in January 2006, but activfity has plummeted since then. Eric Belsky of Harvard's Joint Center for Housing Studies said today the current downturn in starts is the worst since World War II. He said vacancy rates have surged, foreclosure rates are highest in the states that used to have the most construction activity, and rising unemployment is going to make it harder for the housing economy to recover.