It’s beginning to look a lot like the early 1990s for the housing market, officials for the National Association of Home Builders trade group said during a “Credit Crunch” presentation Tuesday.

“The housing market is down, it’s hurting, and it doesn’t look like it’s going to bounce back as quickly as we’d hoped,” said Jerry Howard, CEO for the builders’ group. The focus of the presentation was on problems in the mortgage market and the impacts on the overall real estate market and economy.

While the economy is not in a recession this time around — at least not yet — the risks of recession are increasing, said David Seiders, chief economist for the home builders’ group. Seiders also said he believes the economy can withstand the drag of the housing market, though that will become progressively difficult if the housing market remains in the doldrums.

“The contraction we have under our belts to this point, in percentage terms, certainly rivals the 1990-91 contraction when we did have an economic recession,” he said.

Home prices will continue to drop, he said. “I don’t expect to be seeing systematic price appreciation resurfacing until 2009.” The price drops could be deeper than during the early 1990s, he said, adding that home prices tend to be “sticky” on the down side — they typically don’t drop as much during a down market as they increase during the boom phase of a real estate cycle.

“If you look at the mountain of price appreciation that we had in those earlier (boom) years, the declines have been pretty modest to this point … they probably won’t go all that far beyond what happened in the early 1990s.”

He also said that “affordability measures are still not very good,” and price drops may help to restore some balance with housing affordability.

Seiders expects the annual rate of new-home sales to bottom out at 800,000 in the fourth-quarter. For the full year in 2007, he expects 843,000 new-home sales, and he said he expects that number to rise to 869,000 in 2008.

The rapid run-up in housing prices, sales and production in 2003-05 was clearly unsustainable, Seiders said, and the mortgage-market troubles have blasted a deeper crater for the slumping market.

A rising percentage of builders have reported a “substantial impact” on new-home sales from tighter mortgage lending standards in monthly surveys, Howard said, and most builders now report “some impact” or “substantial impact” from the tightening.

The problems in the subprime market have spilled into other segments of the mortgage market, Seiders said, which has created a bit of panic among investors in the mortgage-backed securities market.

“We knew subprime was contracting and pretty much going into nonfunctioning mode,” he said, though the “newfound problems” include trouble with still-risky but lesser-risk mortgage products such as jumbo loans and Alt-A loans.

Some of the loan products were too risky, he said, and lenders have “clamped down … very strongly” on some of the riskier products. While there were mortgages available during the boom for individuals with credit scores “well down into the 500s,” Seiders said he suspects lenders are now looking at credit scores of 640 or above.

Investors are reevaluating the true value of mortgage-backed securities, Seiders said, which is “affecting the entire array” of mortgage products. “It has just frozen the markets up in terms of uncertainty of value.”

He added, “The reality is we did have a lot of overly aggressive lending during the housing boom,” some of it attributed to speculators and investors. There really are some signals of distress in terms of credit quality and then the markets — they do, in a certain sense, panic.”

Seiders expects the Federal Reserve Board to cut the Federal Funds Rate at least twice before the end of the year to “restore liquidity and functioning to key parts of the financial markets. The Fed will be there to react if in fact things turn out worse than we think,” he said. “We do need the Fed to support the economy and keep the short-term end of the market functioning well.”

Working to keep down mortgage interest rates could help homeowners who are facing a reset in mortgage rates to refinance into more stable loans, he said.

Howard said that the trade group is supporting reform of the Federal Housing Administration and government-sponsored secondary mortgage market entities Fannie Mae and Freddie Mac.

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