Economist for builders speaks out.

The chief economist for the National Association of Home Builders, in his latest annual forecast, said he expects total housing starts to fall 25 percent this year, with single-family starts plummeting 31 percent. The decline will be steeper in the Capital Region. "We still expect starts to begin edging up in the final quarter of this year, but we've also trimmed the outlook for 2009," Seiders stated in a forecast report released last week.

Seiders acknowledged that there is "a nearly even chance" that the economy will slip "into the red zone during the first half of the year." He anticipates "further deterioration of labor market conditions in February, and the unemployment rate almost certainly will be moving up in coming months." He also expects gross domestic product growth of less than 1 percent in the first half of 2008, "and a mild recession certainly is possible during that period," the report states.

A record volume of vacant homes for sale "inevitably will put persistent downward pressure on home prices, further sapping the quality of outstanding mortgage credit and making it even more difficult to refinance or restructure adjustable-rate mortgages facing payment resets," the report states. Financial market turmoil is continuing, Seiders noted, as "the stock market is being battered and the markets for longer-term credit remain under considerable strain.
"The freezing-up of private securities markets, both here and abroad, has shifted credit demands to government-related securities markets and to depository institutions -- resulting in higher loan volume and pressures on capital positions at the depositories."The banking system will have to take up a good bit of the slack in the credit creation process." That has led the banking system to tighten lending standards, which has "afflicted all components of the conventional home mortgage market," he stated in the report.