NAHB: Mortgage woes grow recession risks

A reporter participating in a National Association of Home Builders conference call today asked why the group was hosting a "Credit Crunch" conference call just a month after the group's Mid-Year Forecast call on July 25. She asked what was different about the market now compared to then, and what had changed about the story.

David Seiders, chief economist for the builders' trade group, explained that "newfound problems" in the mortgage market are adding to the problems in the housing market, which continues to drag on the economy. The subprime problems are spilling into a far larger segment of the mortgage market as investors in mortgage-backed securities have entered a panic mode. The current clamp-down is a reversal from the days of easy credit for speculators and investors, he noted.

As a result, Seiders down-sized his forecast for housing starts in 2008 by about 10 percent. And he doesn't expect home prices to recover until 2009. In some ways, the statistics show market declines more severe than in the early 1990s. Seiders said he expects that the economy will drag along the foundering housing market until it rebounds -- all the while staving off a recession, though he said the risks of recession are growing (watch for a related report at Inman News).

Some gloomy terms shared in the NAHB presentation: "unsustainable," "down leg," "stunning contractions," and "another major hit on the economy."

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