Acknowledging that there is definitely downward
momentum in the market at this time - with starts, sales, prices and permits
off - and problems in the subprime and Alt-A mortgage markets, NAHB Chief
Economist David Seiders said that housing should
nevertheless begin a modest recovery next year for a number of reasons: the
overall economy and job growth continue to move ahead at a decent pace; core
inflation is under control; the late-summer credit crunch in mortgage markets
is showing signs of easing since the Federal Reserve cut short-term interest
rates on Sept. 18; and the supply-demand equation will be better balanced as
builders begin to whittle down excess inventories.
He also noted that
the evolving inflation picture gives the central bank latitude to enact more
monetary stimulus to support the economy if conditions warrant. Seiders
predicted the federal funds rate to be reduced from the current 4.75 percent to
4.25 percent.